United Nations

GA/AB/3713
13 December 2005

Budget Committee Approves Financing for Timor-Leste Office, Takes up Latest Report on Capital Master Plan

NEW YORK, 12 December (UN Headquarters) -- The Fifth Committee (Administrative and Budgetary) this morning recommended that the Assembly approve the budget for the United Nations Office in Timor-Leste in the amount of some $23.78 million gross for the period 21 May to 31 December 2005.

Approving, without a vote, a draft resolution on the estimates in respect of special political missions, the Committee also noted that after taking into account the savings of some $6.3 million under the United Nations Advance Mission in the Sudan, the requirements for the Timor-Leste Office amount to some $15.64 million and recommended that the Assembly appropriate that amount under section 3, Political affairs, of the programme budget for the current, 2004-2005, biennium.

The Committee also approved a decision, as proposed by the Acting Chairman, Muhammad A. Muhith (Bangladesh), by the terms of which the Assembly would take note of the Secretary-General's report on the United Nations Fund for International Partnerships (UNFIP), which manages the Fund with the United Nations Foundation in connection with Ted Turner's contribution in support of United Nations causes. It is also responsible for providing assistance to the international private sector and foundations in developing partnership opportunities with the United Nations.

As the Committee took up the latest progress report on the Capital Master Plan (CMP), which was authorized by the General Assembly to address serious deterioration, deficiencies and environmental problems in the seven buildings and 17-plus acres of the Headquarters complex, the representative of the United Kingdom, speaking on behalf of the European Union, emphasized the need to take an early decision on the matter. The Union was not prepared to do nothing for another 50 years and wait until the entire building collapsed, rather than just the ceiling outside Conference Room 5. That would be irresponsible and more costly in the long run, she said.

Indecision was costing some $8 million to $9 million a month, while the project had not really changed, Louis Fredrick Reuter, Assistant Secretary-General and Executive Director for the Capital Master Plan, said, introducing the Secretary-General's report on the matter. The CMP was not an expansion or improvement of quality, but a fundamental fixing of a "60-year-old grand lady".  He sought the Committee's approval to proceed immediately, so as not to compromise the cost or time of the project.

Speakers expressed regret that the previously agreed model, which was based on an offer by the City of New York of a swing space building, was no longer available and that the latest estimates for a phased approach to the implementation of the project, as recommended by the Secretary-General, amounted to some $1.6 billion.

The representative of the Russian Federation welcomed the fact that, in the document presented to the Committee today, the Secretary-General "had finally found the courage" to admit the evident: that the authorities of the City and State of New York were not prepared to collaborate with the United Nations, although the Organization's very presence in the City had become an indispensable feature of its life and a component of its economy.

Most speakers, including the representative of Jamaica, who spoke on behalf of the "Group of 77" developing countries and China, agreed with the Advisory Committee on Administrative and Budgetary Questions (ACABQ) that more detailed information would be required on the proposed strategies in order to take an informed decision on a particular option. Several delegates also focused on the strategy that involved construction of a new permanent office building on the North Lawn.

In that connection, Switzerland's representative said that setting up a building within the United Nations premises merited further consideration, although it would involve higher costs of some $2.1 billion.  That option could possibly build upon the original construction plans, which had initially provided for an office building on the North Lawn, offering the Secretariat additional office space on-site. The building could generate savings in the long run by hosting United Nations staff now occupying rented space. In addition, increased security requirements could be better complied with under that option.

Speakers also considered the ways of financing the project, including payment by direct assessment on Member States, multi-year payments and a proposal on charging interest on arrears or late payments as a mechanism for encouraging timely payment. Delegates noted the fact that the status of the $1.2 billion loan offer from the United States remained unclear, although depending on the terms and conditions of such a loan, it could act either as a source of project funds or as "a credit enhancement vehicle".

Also this morning, the Committee addressed the liabilities and proposed funding for after-service health benefits for United Nations staff. Introducing on that issue today, the United Nations Controller, Warren Sach, said that with increasing cost of medical treatments, the average age of participants and life expectancy, it was prudent to adopt a funding policy that would ensure that adequate funds were put aside to meet future benefit liabilities.

Statements were also made by the representatives of New Zealand (also on behalf of Australia and Canada), Argentina (on behalf of the Rio Group), Kuwait, United States, China, Cuba, Venezuela and Nigeria.  Other documents were introduced by Sabiniano Cabatuan, Director of External Audit (Philippines), on behalf of the Chairman of the United Nations Board of Auditors; Patricia Azarias, Director, Internal Audit Division of the Office of Internal Oversight Services; Rajat Saha, Acting Chairman of the ACABQ; and Angel Silva, of the United Nations Fund for International Partnerships.

The Committee will hold its next formal meeting at 10 a.m. Wednesday, 14 December.

Background

The Fifth Committee (Administrative and Budgetary) this morning was expected to take up a series of reports on after-service health insurance, United Nations Fund for International Partnerships (UNFIP), and the Capital Master Plan (CMP) -- a programme to refurbish United Nations Headquarters in New York. Also before the Committee was a draft resolution on the financing of the United Nations Office in Timor-Leste (see action on drafts).

The Capital Master Plan was authorized by the General Assembly in 2000 to address serious deterioration, deficiencies and environmental problems in the seven buildings and 17-plus acres of the complex. The latest activities relating to the project and four strategies for implementing the renovations are contained in the Secretary-General's third annual progress report on the implementation of the CMP (document A/60/550), which came out in November.

The Secretary-General recalls that the initial approach to the project was based on an offer by the City of New York of a swing space building, which would subsequently consolidate office space outside the Headquarters. The building, called UNDC-5, was to be constructed by the United Nations Development Corporation (UNDC) immediately south of the United Nations Headquarters campus. However, now, even if such construction were possible, costs related to the security aspects would have been prohibitive. Thus, as at September 2005, the approved swing space option was considered to be no longer available, and alternative swing space costs were estimated to be higher than projected and likely to go higher. That was pushing the budget upward to the new estimate of some $1.6 billion.

These developments called for a re-examination of the strategy for the project and development of new approaches. At this point, the Secretary-General recommends that the Assembly approve, effective 1 January 2006, a phased approach to the implementation of the project (Strategy IV) and a revised project budget of some $1.59 billion, to be financed through a multi-year assessment among Member States. Other recommendations include authorizing the Secretary-General to proceed in 2006 with early contracts in such areas as design and construction of a temporary conference facility on the North Lawn and arrangement of multi-year leases for office space in the most suitable and cost-effective locations.

According to the report, the Assembly's decision is required on the 2006 appropriation of some $108.7 million for financing activities emanating from Strategy IV and on the creation of a $45 million operating reserve to ensure the implementation of the project.  Should such an approval be gained from the Assembly this fall, construction would begin during the latter half of 2007.

Among the options of financing the project that were considered over the years was an offer from the United States of a loan of $1.2 billion at an interest rate of 5.54 percent per annum. The total principal and interest, to be repaid over 30 years, including the construction phase, would total $2.5 billion.  During its fifty-ninth session, the Assembly took no decision on this offer, which was set to expire on 30 September 2005. On 9 September, at the meeting of the Fifth Committee, the representative of the host country said that the loan offer would be renewed and adjusted, but at the date of the progress report, no formal notification of such an offer had been received.

The Secretary-General states that, depending on the terms and conditions of an expected renewed offer from the host country, such a loan could act either as a source of project funds or as a credit-enhancement vehicle to enable the United Nations to access short-term borrowing or letters of credit in international capital markets.

An addendum to the Secretary-General's report contains an explanatory note on the viability of outside commercial borrowing (document A/60/550/Add.1), which was examined with a financial consultant's assistance.  Among the possibilities were loans guaranteed by Member States, borrowing against the assets of the Organization, and a bond offering.

Only the option of a bond offering is considered viable, according to the report. The first possibility was not considered practical, since it would require individual Member States to act as legal guarantors of a loan granted to the Organization. Outside borrowing against the Organization's assets was not considered viable due to the United Nations special status under the Convention on the Privileges and Immunities of the United Nations.

A bond offering represents a written obligation of the issuer to repay a loan under specific terms, including the years for repayment and the interest rate to be charged on the loan. According to the report, the bonds can be structured to mature over 25 years, resulting in level annual debt-service requirements. In order for the Organization to make a bond offering, Member States would have to assure the bond holders of the return of their investment. That would entail Member States paying their assessments directly to a bond trustee - normally, a major financial institution -- which would be authorized to "set aside" a certain percentage for the sole purpose of meeting the required annual debt-service payment (principal and interest) under the offering.  Once the required debt-payment amount was reached, the rest of payments would be fully directed to the Organization's regular budget.

Lower interest rates on loans are available in capital markets to borrowers who have ample "debt service coverage". For a United Nations bond, such coverage could be created by permitting the trustee to set aside a higher-than-required annual percentage of Member States' payments to service the Organization's debt. Such an arrangement would provide a "cushion" to protect investors from unanticipated declines in the expected flow of revenue available for debt servicing. Taking into account the historical pattern of payments by Member States, to achieve ample debt-service coverage, investors would probably require 250 per cent of the normal debt-service percentage to be set aside from payments early in the calendar year.

Also before the Committee was a report of the Board of Auditors (document A/60/5 (Vol. V}), which presents the results of the Board's review of the project's operations for 2004.  According to this document, as of 31 December 2004, cumulative expenditures for the CMP totalled about $26 million. Of that amount, nearly $6.9 million was spent in 2000-2001; $4.3 million in 2002-2003; and $14.8 million for 2004. For this year, expenditures for the plan total nearly $25.3 million, including $7.5 million for the design development phase, and $17.8 million for the construction documents phase.

Among the Board's findings is the fact that delays in approving the final scope confirmation reports and quality control plans for four design contracts had affected the schedule for the completion of the design development plan. The Administration also did not follow on the Assembly's decision to create an advisory board to provide advice on financial matters and overall project issues.

The Board's two primary recommendations are that, if circumstances warrant, the procedures for the coordination of work among the firms engaged in the design should be reviewed to ensure that work is completed on time and within budget. The Secretary-General should also consider creating the planned advisory board.  However, the Board recognizes that the basic issues to be resolved remain the source of funding and the legal agreements on the swing space. The Board is concerned that if the funding arrangements and appropriate arrangements for the swing building are not resolved promptly, the preparations taken so far could become irrelevant to some extent.

According to another report before the Committee (document A/60/288), from August 2004 to July 2005, the Office of Internal Oversight Services (OIOS) provided continuous audit coverage of activities relating to the CMP, as well as the construction phase of the security strengthening project. Such oversight was to determine whether adequate internal controls had been established by the departments and offices responsible for the execution of the project.

The OIOS concluded that the resources appropriated for the CMP were generally utilized in accordance with the Financial Regulations and Rules of the United Nations. However, it also found that operating procedures and contractual documents needed to be improved.

Regarding swing space, the report recalls that the original schedule provided that the construction of a new building was to be completed in December 2005, which would have allowed for relocation into UNDC-5 between January and June 2006. With the construction of UNDC-5 behind schedule, in March 2005, the CMP office entered into a contract with a real estate broker to assist in identifying alternative space for occupancy in 2007. In the view of the OIOS, the process used for selecting the real estate broker was transparent and fair.

Also noted in the report is the fact that an advisory board was to be formed to advise the Secretary-General on financing and overall project issues. Such a board, although proposed by the Secretary-General and concurred in by the Assembly in its resolution 57/292, was never established. Since the CMP operations are becoming progressively more complex, it is imperative to address the matter without further delay.

Commenting on the implementation of the project, the Advisory Committee on Administrative and Budgetary Questions (ACABQ), in a related report (document A/60/7/Add.12) regrets that the approved swing space option is no longer available and alternative space costs are estimated to be higher than projected. In connection with the need to re-examine the strategy for the CMP, the Advisory Committee trusts that the pitfalls of recent experience can be avoided with proper planning in the future.

The Advisory Committee further states that the Secretary-General's report does not provide a complete enough analysis of all the options to enable the Assembly to take a fully informed decision. In particular, more complete analysis is needed on Strategy III, which includes the possibility of constructing a new permanent building on the North Lawn. Such a building could obviate much of the need for rental of swing space, thus resulting in savings. As for the aesthetic concerns about such construction, the ACABQ points out that, with a creative design approach, it may be possible to preserve the aesthetic value of the complex.

Building temporary conference facilities on the North Lawn is foreseen under all four strategies.  Experience shows that once constructed, temporary buildings tend to be used for a far longer period than originally projected. Given the cost of building and removing a temporary structure, full information should be obtained on the relative costs and merits of constructing a permanent structure instead. Also noted in the report is the fact that while Strategy II is deemed not to be feasible, there is no accompanying analysis providing the specifics of what has to be modified or eliminated in order to stay within the initial $1.2 billion estimate for the Capital Master Plan.

The Advisory Committee insists that necessary analysis and additional information should be provided directly to the Assembly quickly for its consideration at the earliest opportunity. In the meantime, in order to minimize further delay and provide for the smooth and continuous implementation of design and planning work, the Committee recommends an appropriation of $102.7 million, including the existing 2006 commitment authority in the amount of $8.2 million. Any amount that would be required over and above that amount could be considered in the context of the review of that particular option.

The ACABQ has no objection to the proposed construction-in-progress account. While agreeing in principle with the creation of a reserve fund, it recommends that this question be revisited when the Assembly decides on the main strategy for the CMP. As for the options for a one-time versus multi-year assessment on Member States, the Advisory Committee is of the view that a policy decision by the Assembly is required on this matter.  Stressing the need for uninterrupted financing of the Capital Master Plan, the ACABQ also states that the question of charging interest should be addressed as a matter of policy. Another request contained in the report relates to the need to establish the advisory board on the CMP as soon as possible, on a broad geographical basis.

After-Service Health Insurance

Also before the Committee was the Secretary-General's report on liabilities and proposed funding for after-service health benefits (document A/60/450). The ACABQ raised the issue of the United Nations liability regarding after-service health insurance benefits in its review of the 1998-1999 proposed programme budget.  The Board of Auditors also emphasized the urgency for all organizations to recognize the end-of-service benefit liabilities and to disclose them in the financial statements. In its resolution 58/249 A, the Assembly requested the Secretary-General to report on the full extent of unfunded staff termination and post-service liabilities and to propose measures to fully funding such liabilities.

The Secretary-General indicates that the present value of the accrued after-service health insurance liability as of 31 December 2003 is estimated at a total of $4.02 billion for the United Nations and organizations of the common system. Currently, most of the organizations in the United Nations common system account for after-service health benefits on a "pay-as-you-go" or cash basis. In many cases, these expenditures are not necessarily separately identified within staff costs. A number of organizations have now decided, given the significance of the liability involved, to recognize a liability in the accounts for after-service health insurance benefits and, at the same time, identify sources from which the liability can be funded.

The United Nations health insurance programmes provide for premium-sharing between the United Nations and plan participants -- active and retired.  Resources for the after-service health insurance subsidy for retirees enrolled in the United Nations health insurance plans are appropriated under special expenses section of the programme budget. The amounts appropriated biennially do not include funding for the accrued liability for after-service health insurance benefits earned by employees during active service. The average after-service health insurance enrolment increased from 2,672 retirees during the biennium 1984-1985 to 7,105 by the end of 2003, and that the organizational subsidy for retiree medical benefits increased from $6.9 million to $67.7 million during the same period.

The present value as of 31 December 2003 of the accrued after-service health insurance liability of future benefits (net of retiree contributions) for the United Nations is estimated at $1.5 billion.

A number of revisions to the after-service health insurance programme to reduce future costs of after-service health benefits have been proposed, the report states. These measures would be applied essentially to new recruits. The impact on costs would not be realized until 10 years from now.  The proposed revisions include an increase in eligibility requirements for subsidy from 10 to 15 years minimum participation in the United Nations health insurance plans with a "buy-in" provision after 10 years of participation.

The Assembly is asked to approve a number of recommendations to begin funding the United Nations liability for after-service health insurance benefits of the United Nations, the International Tribunals for the Former Yugoslavia and Rwanda and the United Nations Compensation Commission. Effective 1 January 2006, with initial funding of $350 million, $250 million would be transferred from unspent balances and savings on, or cancellation of, prior periods' obligations of active peacekeeping mission at the end of the 2005 fiscal year, and $25 million would be transferred from the authorized retained surplus in the United Nations General Fund. In addition, $43 million would be transferred from the medical and dental reserve, and $32 million would be transferred from the Compensation Fund to partially fund the United Nations liability.

Actions regarding ongoing funding include continuing biennial appropriations to cover after-service health insurance subsidy payments in respect of current after-service health insurance payments; establishing a charge equivalent to 4 per cent of salary costs to be applied against the budgets to which staff salaries are charged; and using unspent budget appropriations in the United Nations regular budget. The Assembly is also asked to authorize full recognition of the after-service health insurance liability on the Organization's financial statements. It is also asked to approve funding of current and future after-service health insurance liabilities of the two Tribunals effective 1 January 2006, including by establishing a charge equivalent to 4 per cent of the Tribunals' salary costs to fund their liability.

Concurrent with the Assembly's approval of these measures, separate special accounts for post-retirement benefits and retiree premiums would be established for the United Nations, the Tribunals and the Compensation Commission, the report says. These accounts would be used to account for all transactions from various sources mentioned and to record ongoing expenditures for after-service health insurance. The United Nations will apply a prudent cash management and investment strategy with the aim of maximizing the return on the investments, while preserving the principal of the funds that have been set aside to fund the liability.

In its related report (document A/60/7/Add.11), the ACABQ regrets that it took more than seven years to prepare the report, after its initial recommendation on the issue in 1997.  Regarding the estimate of the present value of the accrued after-service health insurance liability of future benefits -- $1.5 billion -- the ACABQ states that while that estimate was taken by the Secretary-General as an important reference point for analysis and subsequent conclusions, the underlying methodology for arriving at the estimate has not been clearly explained.  Since the end of 2003, potential after-service health insurance liabilities have no doubt escalated.  Updated data should be made available to the Assembly before any decision on the matter is taken.

The Advisory Committee requests that detailed information be provided regarding how the provisions for current retirees ($770 million) and active employees currently eligible to retire with after-service health insurance benefits ($321.5 million) were derived. Regarding the estimated provision of $3.93 billion for liabilities related to active employees who are not yet eligible to retire with after-service health insurance benefits, the Advisory Committee questions the inclusion of such a provision in the total estimate of $1.5 billion, since the notion underlying the provision is not clear -- some of the active employees will retire without ever acquiring eligibility for after-service health insurance benefits, while others may choose not to participate in after-service health insurance.

The report notes that the ACABQ was informed that the proposed amount of $250 million for the transfer from accounts of peacekeeping operations represents approximately half of the total amount of unspent balances and savings for all active peacekeeping missions as of the close of the peacekeeping fiscal year on 30 June 2005. Although peacekeeping budgets should fund their share of the costs of after-service health insurance, it is not clear why active peacekeeping missions should fund an accrued liability attributable at least partially to closed peacekeeping operations. 

Regarding the proposal to transfer $25 million from the retained surplus of the United Nations regular budget, the Advisory Committee was informed that the Assembly had authorized the retention of $2.14 billion of surplus and also authorized write-offs and transfers of $1.5 billion, which reduced the retained surplus balance to $68.3 million. The write-offs and transfers were authorized to liquidate debts for unpaid contributions, to establish the Peacekeeping Reserve Fund and to write off outstanding loans. The ACABQ finds little rationale or justification for the figure of $25 million. In that regard, the Secretary-General should be requested to provide a justification for the calculating the amount, as well as to report on all options with regard to its utilization, including its return to Member States.

The Advisory Committee has no objection to the transfer of $43 million of income from the medical and dental reserves provided that an assurance can be given to the Assembly that this amount will not be needed in the future to meet medical and dental costs. The Advisory Committee has no objection to the transfer of $32 million from the Compensation Fund, with a similar proviso.  Should the Assembly decide to establish a reserve that would accumulate after-service health insurance funds, the question of how to best manage and invest after-service health insurance funds would arise. The ACABQ has no objection to the Secretary-General's proposal to continue biennial appropriations to cover after-service health insurance subsidy payments in respect of current participants.

Regarding the proposal to establish a charge equivalent to 4 per cent of salary costs on all budgets to be applied against the cost of salaries paid to staff, while the Advisory Committee agrees in principle with the proposal to charge a certain percentage of salary costs as a means of building a fund for after-service health insurance payments, further analysis should be taken before it can recommend a specific percentage. Regarding the proposal to use savings under the regular budget, the ACABQ points out that planning in advance to systematically use savings as part of a funding mechanism for after-service health insurance does not appear to be in line with the best management practices, as it is not transparent and may encourage deliberate overbudgeting to realize savings. According to Assembly resolution 56/237, savings achieved as a result of efficiency gains are supposed to be directed to the Development Account.

United Nations Fund for International Partnerships

The Secretary-General's report on the activities of the United Nations Fund for International Partnerships (UNFIP) (document A/60/327) -- which manages the partnership with the United Nations Foundation in connection with Robert E. (Ted) Turner's contribution in support of United Nations causes -- contains information on the outcome of the Fund's fifteenth and sixteenth funding cycles that took place in 2004, progress in each programme area, and a review of the Fund's activities in advocacy and partnership-building. As in previous years, UNFIP was responsible for providing technical assistance to the international private sector and foundations in developing partnership opportunities with the United Nations common system.

According to the document, a total of $76.8 million was programmed for 2004, with the grants distributed as follows:  children's health, $46.5 million for 12 projects (four new); population and women, $3.5 million for six projects (four new); environment, $22.6 million for 13 projects; peace, security and human rights, $2.3 million for nine projects (seven new), and $2 million for seven projects (four new) outside the four thematic areas.  Since the partnership between UNFIP and the United Nations Foundation was launched in 1998, a total of $639 million has been programmed.

Introduction of Documents

LOUIS FREDRICK REUTER, Assistant Secretary-General and Executive Director for the Capital Master Plan, introduced the Secretary-General's third annual progress report, saying he wished to summarize the fundamental concepts of the third annual report.  Four specific solutions worthy of study had been found and a single solution was being recommended. He would present today a revised financing proposal that would cause less political difficulty and allow the project to move more quickly. In each of the options, the goals of the CMP remained unchanged, namely to achieve code compliance in all buildings, replace or refurbish deteriorating equipment and systems, ensure the health and safety of occupants in all buildings, improve security, increase energy efficiency and adjust and retrofit facilities for modern uses, loads and technologies.  No grand offices or new finishes were being proposed. The CMP was not an expansion or improvement of quality, but a fundamental fixing of a "60-year-old grand lady".

He said the goal was to find a solution, as the UNDC-5 building had not been brought to fruition. The United Nations Institute for Training and Research (UNITAR) building was also not part of the project. The UNDC-5, as a separate corporation from the United Nations which had access to capital markets in the United States, was going to build a building on adjacent property. Over a period of 35 years, the United Nations would have paid rent on the building at a cost of $96 million, after which time the building would have belonged to the United Nations. The project had puttered slowly along, and had not reached a successful conclusion. If it could start today, on the basis of recent market escalation, it would cost the United Nations some $1.542 billion.

The original projections for the CMP were what they had expected for construction escalation over 15 years, he added.  Following 2001, there had been very little building or a flat period in New York City construction. All of a sudden, however, New York was booming and construction had escalated at a rate of 11 per cent per annum.  Outlining the various options, he said there was a concept among some that the CMP was a glorious renovation in which capacity would be greatly increased. In fact, there was almost none of that. About 1 per cent of the scope had to do with additional conference rooms and upgrading of finishes. Almost all of the scope had to do with meeting current health and safety standards.

After much analysis, a method for renovating the building that was prudent, doable and safe had been determined, he said. It would involve using the four intermediate mechanical floors in the Secretariat Building as isolation and separation floors. Eight to 10 floors at a time would be completely sealed off. Such renovations occurred constantly in New York.  It was common for owners to have at the time of construction 100 per cent of the money needed to complete the job. The recommendation was that the CMP be paid for by member assessments. Alternative financing mechanisms had been examined. An international letter of credit was not a loan, but a guarantee of access to some market credit.  The letter was not considered an interest expense, but a fee for a service.  Most international business transactions were backed up by such letters of credit.

The recommendations contained in the report would allow the CMP to proceed in a timely manner, he concluded.  Indecision was costing some $8 million to $9 million a month. The project had not really changed.  He sought the Committee's approval and support to proceed immediately, so as not to compromise the cost or time of the project.

SABINIANO CABATUAN, Director of External Audit (Philippines), on behalf of the Chairman of the United Nations Board of Auditors, introduced that body's report, noting that the review covered the overall implementation of the CMP, including the design development contracts executed in 2004. The Board had taken note of the status of implementation of the Plan as it related to three main factors, namely the availability of funding, swing space and the progress of technical preparations. As of 31 December 2004, the cumulative expenditures for the CMP had already reached some $26.04 million, of which $14.8 million pertained to expenditures for the period from 1 January to 31 December 2004. In an effort to minimize operating costs, the Administration had reduced its Capital Master Plan staff from 17 to 14 in March 2005.

The Board remained concerned, he said, that the delays in the overall implementation could significantly affect the final cost of the plan owing to expected price escalation. The Organization would likely have to pay high maintenance costs in terms of energy consumption for as long as the refurbishment did not take place, not to mention the risks the building occupants and visitors were exposed to. In addition, the preparations undertaken so far could, to some extent, become irrelevant if the funding and swing space issues would not be resolved promptly. The Board had recommended and the Administration agreed to review the procedures for coordination of work and activities among the professional firms engaged for the design phase to ensure that work was completed within the time frame and budget.

PATRICIA AZARIAS, Director, Internal Audit Division of the Office of Internal Oversight Services, introduced that body's report.  She noted that, if the OIOS continued providing continuous oversight of the CMP, it required adequate resources to execute the mandate. The resources allotted during the current reporting period allowed for the recruitment of one auditor on a short-term, temporary assistance basis. Although the level of the post had been upgraded as of January 2005, the level of funding was still not sufficient to provide the oversight coverage intended by the General Assembly in its resolution 57/292.

RAJAT SAHA, Acting Chairman of the ACABQ, then introduced the Advisory Committee's related report.

Statements

ELIZABETH GALVEZ (United Kingdom), speaking on behalf of the European Union and associated States, reiterated the Union's firm support for the CMP, saying that a proper refurbishment was long overdue. The Union was not prepared to do nothing for another 50 years and wait until the entire Building collapsed, rather than just the ceiling outside room 5. That would be irresponsible and more costly in the long run. It was necessary to take an early decision to enable the project to move forward quickly.

"We have all heard the comments from certain quarters that this project is a "boondoggle", or a waste of public funds, she continued. Those comments had clearly been made by individuals who had not set foot inside the Building. She challenged them to undertake the so-called "dirty tour" and to see for themselves the antiquated heating system, the inadequate electrical wiring, the asbestos in the walls, not to mention the dangerous lack of fire-detection systems. She doubted they would then talk so readily of "boondoggles" or luxury refitting.

The Union regretted the failure of the swing space project, which had changed the "complexion of the project" significantly, she said.  She was grateful that the Secretariat had revisited the entire scope of the project and outlined several new options for Member States' consideration. Her delegation would have a number of questions on the options described. In particular, it would need further clarification on the recommended Strategy IV, as well as the Secretariat's response to the questions raised by the ACABQ. She also noted that the revised costs had risen to $1.6 billion for the recommended option and that a firm recommendation had been made for payment by direct assessment over a period of five years, backed by a letter of credit to obviate the need for the Secretariat to have full cash availability up-front. The Union would explore further in informals the rationale for the rise in costs, as well as the potential for savings.

On financing, she agreed in principle that payment by direct assessment was the simplest method of financing and that it would make sense to have a mechanism in place to cover contractual obligations.  Nevertheless, there were a number of other factors, which would need to be clear. First of all, was the assumption correct that all Member States would have to agree to a system of payment by direct assessment and that all such payments would need to be made, more or less, on time if such a system were to be workable? Second, what would be the fee for a letter of credit without any other means of guarantee?  And what would be the trigger for drawing on the letter of credit? How would the Secretariat ensure that any payment of interest for drawing on the letter would not be applied to Member States who had made their payments in full?  As for the advisory board, she encouraged financial experts to come forward to advise the Secretary-General.

Member States had spent many hours over the past year discussing the contribution of the host country, she added.  She regretted the unwillingness of the State of New York to take the necessary decisions that would have allowed the DC-5 to go ahead, though a large price hike was an additional and unwelcome hurdle. Host countries should be prepared to take on additional financial responsibilities in maintaining their United Nations premises. The status of the loan offer from the host country remained unclear. The existence of a loan would bring down the cost of a letter of credit. The absence of any news on that front, therefore, made it difficult for Member States to have a clear picture of the overall cost of the project.

NORMA TAYLOR ROBERTS (Jamaica), speaking on behalf of the "Group of 77" developing countries and China, said that when the Assembly had approved the comprehensive approach to refurbishing the United Nations Headquarters through the CMP, it had been on the basis of an offer by the city of New York of a swing space building, which would involve vacating the complex to the greatest extent possible. The decision had been based on the findings of a comprehensive design plan, which highlighted certain concerns for renovation during occupancy, namely, safety and health hazards, extended duration of work and additional cost. The availability of swing space was considered indispensable for the implementation of the refurbishment.  The Group, therefore, expressed its deep disappointment at the failure of plans for the DC-5 building and, as advised by the Secretary-General, that it was no longer a realistic option for swing space in the foreseeable future.

Expressing appreciation for the Secretary-General's report, she also noted with concern the increase of over $500 million in the projected budget. She recognized the work done by the Secretariat in elaborating various alternative strategies and was conscious of the urgency in taking a decision on a new approach to implementing the CMP. The Group had looked forward to a detailed discussion of the project during the main part of the session in order to agree on the way forward. It was open to discussing the merits of each of the four strategies presented by the Secretary-General.  She regretted, however, the late submission of the report, which seriously hampered any detailed consideration of the matter. In addition to the time constraints, more detailed information would be required on the proposed strategies in order to take an informed decision on a particular option. For example, the ACABQ had pointed out that Strategy III, which involved construction of a new permanent office building on the North Lawn, could possibly have more long-term advantages.

Unfortunately, those factors would not facilitate a decision during the main part of the session, she said.  However, conscious of the urgency of the project, the Group was prepared to take up the issue with the highest priority in the first resumed session. At this time, it would be prepared to consider any appropriation that may be required, without prejudging any of the strategies that would be chosen for the CMP. With respect to financing options, she wanted to know the current status of the loan offer by the host country, while reaffirming the approach for direct assessment of Member States. The Group reaffirmed its firm commitment to the CMP and the urgent need to commence its implementation in order to resolve the unacceptable health and safety deficiencies of the United Nations Headquarters.

PHILIP TAULA (New Zealand), speaking also on behalf of Australia and Canada (CANZ), said the Secretary-General's most recent report confirmed that the model based on DC-5 swing space was not workable. In that regard, he asked to what extent the delays incurred pending local decisions on DC-5 had contributed to the cost increases the Organization now faced. The new report was an important step towards formulating a new approach for progressing the CMP and its financing. A final decision would be enabled by a more complete analysis of the feasibility of building on campus. In addition to an economic assessment that took account of the benefits of a consolidation building, the Secretary-General should elaborate on other germane factors, such as the architectural integrity of the site, the importance attached to open space and any regulatory, legal or other impediments that might relate to use of the North Lawn. The Secretary-General had alluded to those factors, but a full presentation needed to underpin an informed decision.

Concerning financing arrangements, and absent an interest-free loan, he said he was pleased that the report focused on payment by assessment. Multi-year assessments would be the most practical approach, but the group was open to other scenarios, with the understanding that the project remained a shared responsibility. How to deal with late payments was complex, but could be resolved by deciding that costs incurred due to late payments would be the responsibility of the Member States concerned. Regarding the proposed use of a letter of credit, there seemed to be no reason such an instrument could not be used. Whether a possible loan offer from the host country could be used to back up a letter of credit might best be considered after an offer was received and its terms known.

He said he recognized the need for a distinct CMP account.  It would be helpful, however, to have a more complete understanding of the relative merits of maintaining the account separately with its own assessment, or making provision for that within the regular budget. He supported the requirements for an additional appropriation of $108 million for design and pre-construction phases of work. He wondered, however, to what extent the use of the funding depended on the decision of which project strategy to follow.  He hoped the additional information on the viability of an on-campus approach would be conveyed swiftly, so that the Committee might make the decisions needed to ensure that the United Nations Headquarters were efficient and safe for staff, delegations and visitors alike.

ALEJANDRO TORRES LEPORI (Argentina), speaking on behalf of the Rio Group, associated himself with the position of the Group of 77 and China and said that he was grateful for the evaluation presented today of the four strategies of action that, in a way, redirected the orientation of the Committee's deliberations. He acknowledged the urgency of the project and the need to make a decision on a process that had been debated for so many years. Nonetheless, due to the high costs and the different options involved, sufficient time was needed to carefully consider the proposal. In that regard, he was concerned over the fact that the ACABQ had the view that the report of the Secretary-General had failed to provide a thorough analysis of the relative advantages of all options.  He noted the Secretariat's recommendation of the fourth strategy.  He also believed that the establishment of the advisory board on a broad geographical basis would be useful.

The original architectural project had not foreseen the exhibition of works of art, he continued. That was the reason why artistic pieces had been exhibited, in most cases, in inadequate conditions, with serious risks for their integrity. In that connection, he drew the Committee's attention to the fact that, while renovation work was being carried out in front of Conference Rooms 5 and 6, a work of art had not been properly covered and protected there. That caused concern that, in the future, works of art would not be properly handled, either. The Group wanted to know if the CMP had considered the proper management of such work of art and if it had taken into account the need to dismantle, transfer and store them. In the same vein, he wished to know if the renovation project had duly taken into consideration the requirement for the preservation of that patrimony.

There had also been arguments to support a renovation of the Building in full compliance with modern standards of safety and security, he said. That was why the Group was eager to know if it had been foreseen that the reform work in progress did not affect the health of United Nations personnel and delegates, should Strategy IV be chosen. And finally, he said that the Group was opposed to any possibility of charge or interests for arrears to the assessments of the CMP fund, especially when the Assembly had not decided yet on the means of financing. To avoid new delays, the Group would commit itself to give the project all necessary means to allow continuation of the design and planning work. The Group would engage in the negotiations in a constructive way, so as to facilitate the adoption of a decision as soon as possible, albeit allowing sufficient time for its members to carefully analyse and weigh the available options.

KHALID HAMAD AL-KHALIDI (Kuwait) endorsed the statement by Jamaica on behalf of the Group of 77 and China and said that, given the importance of health benefits for the staff, his delegation welcomed the Secretary-General's report contained in document A/60/450 and agreed with the ACABQ that there was no rational ground or justification for the proposal of transferring $25 million from the reserved surplus in the United Nations regular budget, in addition to the lack of justification for "non-financing" the active peacekeeping missions from closed peacekeeping operations.

He said that his delegation closely followed up the projects presented for the renovation of the Headquarters and called upon the Secretary-General to act urgently in order to establish an advisory council on financial questions, as well as on matters related to the entire project whose implementation had been approved by the Assembly. Contracts related to the project should be controlled and improved with a view to ensure and safeguard the Organization's and Member States' interest by avoiding ambiguity.

Kuwait had followed the ongoing intensive deliberations on the Organization's regular budget for the next biennium, he continued. He hoped Member States would be able to reach an agreement satisfactory to all parties, which would enable the Secretariat to pursue the task of assuming its responsibilities without hindrance. His country would pay its contributions in full, on time and without conditions. He praised what had been achieved by now, while calling for greater cooperation and coordination between the Member States and the Secretariat to attain the desired objective in developing and promoting the United Nations.

KHUSHALI SHAH (United States) said that the United States continued to carefully review the Secretary-General's proposal to ensure that all parts of the plan were central to ensuring the safety and security of all of the staff, delegates and visitors who were at the UN Headquarters on a daily basis. Based on the latest review of the project, the Secretariat had proposed a revision to the current approach. She also noted that those developments had caused the cost of the CMP to increase significantly. Her delegation was, therefore, disappointed that the Secretary-General's report had not elaborated further as to why it would not be possible to work within the cost estimate that had been agreed to by the Assembly in resolution 57/292. Her delegation had hoped that there would have been more information on that option, so that delegations could fully consider whether there was a feasible strategy that was close to the original cost estimate.  While creating a safe and secure work environment was critical, it was also necessary to be diligent about containing costs. Her delegation had also noted the ACABQ's comments with regard to Strategy III and looked forward to receiving more information in response to them.

She added that the Secretary-General's report had also raised a number of other issues that the Assembly and Member States must consider, such as requests for an appropriation for the construction documents phase, overall project financing, the establishment of a working operating reserve fund, and the idea of interest charges for late payments of assessments. Those were all significant issues that must be subject to thorough discussion, especially given the sizeable financial and other ramifications of decisions on those subjects.  However, she was not sure that all of those issues needed to be decided at this time.  She looked forward to discussions as to what the Assembly must decide at this point, and which decisions could await further analysis and discussion.

VLALDIMIR IOSIFOV (Russian Federation) said the question on the need for a capital refurbishment of the Headquarters had been in the sight of Member States for a long time. Unfortunately, not much progress had been made in solving such fundamental questions as financing of the project and the construction of swing space. The cost of the project grew every year. His delegation was impressed by Mr. Reuter's approach to resolving the problem speedily. For the first time, Member States had received concrete proposals and accurate figures. He called on Member States to be as business-like in considering that important issue. The time was past when the Organization could consider inherently unprofitable proposals just because it was not convenient not to reject them right away. The Secretary-General had finally found the courage to admit the evident; that the authorities of the City and State of New York were not prepared to collaborate with the United Nations, although the Organization's very presence in the City had become an indispensable feature of its life and a component of its economy.

The question of the construction of UNDC-5 now appeared closed, and he regretted the loss of time and financial resources, he added. In the interest of the Organization's common cause, it was necessary to avoid politicization of the discussion and focus on a specific proposal. He took note of the Secretary-General's preference for the fourth strategy, as well as the ACABQ's view that Strategy III had certain advantages over the long term. His delegation required additional information, in particular on the information provided in section nine of the report, which was a new element that had not been clearly addressed before.  He was disappointed by lack of comments by the ACABQ in that regard, and requested the Secretariat to provide an exhaustive list of documents from the host country on the basis of which the conclusions in paragraphs 24 and 25 of the report had been made.

Regarding the effect of the refurbishment on the calendar of meetings, he said Member States needed to start thinking now about the corresponding strengthening of the Committee on Conferences, which was the only subsidiary body of the Assembly with oversight over the calendar of meetings. The Russian Federation confirmed its readiness to pay its share of the financing of the CMP through an additional assessment during reconstruction. He did not agree with the proposal on charging interest on arrears or late payments as a mechanism for encouraging timely payment.

WANG XINXIA (China) noted that three years ago, when the Committee had discussed the various options for the Plan, her delegation had supported a well planned and well managed renovation plan. China had also expressed hope that the Plan could be carried out smoothly and as soon as possible. China's position remained unchanged. It was a disappointment, however, that what most Member States wished to see had not happened and that the basic parameters for implementing the project had changed fundamentally.

She said she had studied the four options in the report and found that there was not much to choose from. The first option was similar to the renovation plan approved by the General Assembly, and UNDC-5 was no longer a feasible swing space option.  What was most worrying was that the United Nations would be subject to the changes in the New York real estate market. Option III included a proposal to build a permanent building, and she was uncertain of its feasibility. Option IV, which the Secretariat recommended, provided for a phased plan. Though the costs for leasing swing space was lower in that option, redesign costs had gone up sharply.  Thus, the cost of the two options was basically the same. Her delegation would study the options with other delegations and weigh all the pros and cons.

Financing was key to the Plan's implementation, she said. She favoured the financing method based on assessments on Member States. How the assessment was done could be left to Member States to decide.  Uninterrupted financing of the CMP was necessary. Regarding the letter of credit, she shared the concerns raised by the United Kingdom on behalf of the European Union. As for the external commercial loans, her delegation needed time to study the issuance of bonds, so as to have a better understanding of it.  She also had questions about the reserve mechanism.

PABLO BERTI OLIVA (Cuba) supported the position of the Group of 77 and China and acknowledged the work accomplished in the last couple of months. Once again, the Fifth Committee had before it a report on the CMP, but this time the proposals made by the Secretariat represented a considerable change from the prior decisions taken on the project. The late presentation of the reports to the Committee limited the ability of Member States to conduct a truly detailed analysis of the situation, and he was profoundly disappointed over that fact. His delegation believed that the improvement of the Headquarters complex and services to Member States was of crucial importance, but the cost it represented, in particular to developing countries, should be carefully assessed. Some $30 million had already been spent on the project since 2003 and now, once again, the United Nations was starting from square one. Member States should ask themselves why the Organization was facing that problem. An answer could probably be found in paragraph 6 (a) of the Secretary-General's report:  neither the City and State of New York nor the United States Congress had complied with their commitment to make viable the plans for a swing space building.

He agreed with paragraph 11 of the ACABQ report on the information presented in the Secretary-General's report, he said. To speak in favour or against any of the four strategies, his delegation needed a more detailed analysis of the options presented. For all the strategies, he wanted to know how much was needed to maintain safety and security of staff, for example. He also wanted to know about the cost of repairing the Secretariat Building under various strategies.

On financing options, he said that in paragraph 35 of document A/60/550, he saw a statement that alternatives A and B would both meet the requirements for cash assessments to fund the Plan, but they did not fully meet the construction industry requirements. Consequently, the United Nations would require, in addition, one or more of other alternatives, which ranged from an irrevocable letter of credit to a loan or loan guarantee from host country, with the last option carrying favour. Without prejudging a decision on the matter, he believed that in the case of letters of credit, more detailed information on the costs involved should be provided. The issue of the host country's loan offer was very sensitive. The loan with interest was counter to what had been agreed, and he regretted that, despite considerable income that the host country had from the Headquarters situated in New York, it had not provided an offer of an interest-free loan. The host country's representative had indicated earlier this year that the loan offer would be renewed and adjusted, but no formal confirmation had been received to that effect.

The idea of charging interest from Member States on arrears was a novel alternative, he said, but it had certain implications that would further complicate the decision on the matter. Regarding the establishment of the advisory board, he understood the explanation of the problems involved, but the Secretariat should make a better effort to resolve the matter. There was agreement on the need to establish the board among the Board of Auditors, the OIOS and the ACABQ.

THOMAS STAHLI (Switzerland) said that the CMP had reached a critical juncture, even though it was still in the design phase, when major problems usually did not occur. He fully shared the report's conclusion that option II was not feasible without changes resulting in severe deficiencies of the life safety system, even though the report did not further elaborate on that point. Regarding option I, he shared the concerns that a major involvement in the local real estate market involved risks, which could potentially be difficult to manage.  Moreover, the staff would be dispersed to multiple locations without direct access to meeting facilities. That would certainly harm the Organization's daily work and imply further cost increases caused by additional logistical expenses.

The option of setting up a building within the United Nations premises merited further consideration, and he commended the office of the CMP for option III, he continued. He acknowledged its higher costs of some $2.1 billion, taking into account the construction of an additional office building on the North Lawn plus the refurbishment of the existing Secretariat Building. Comparing the project cost per square foot as shown in table 2 of the Secretary-General's report and the information provided in the annex to the report of the ACABQ, option III became a valid alternative to the proposed option IV.

He said that the implementation of that option could possibly build upon the original construction plans, which had initially provided for an office building on the North Lawn, offering the Secretariat additional office space on-site. The building could host United Nations staff now occupying rented space in commercial buildings and consequently generate savings in rental expenses in the long run. In addition, increased security requirements could be better complied with under that option. He, therefore, shared the Advisory Committee's observation regarding the lack of information on the revenue side, which should be better reflected in option III, based on a life-cycle study of all existing and rented United Nations buildings. Irrespective of the option chosen, his delegation would seek further information regarding the current use of the North Lawn, which, as far as he understood, was currently not accessible to the United Nations community, or utilized for any other sensible purpose.

Regretting that further delays of the project had led to a substantial cost increase, he invited all delegations to work towards a speedy decision on the scope of the project. Switzerland had extensive experience with different financing options for the construction and renovation of premises of international organizations and would have favoured the option of an interest-free loan from the host Government.  Looking at the proposed financing options, it was his understanding that the commercial loan offered by the host country would now be used as a credit enhancement vehicle and not as a project-financing source.  His Government was ready to accept either of the two proposed financing options. The option of a one-time assessment upfront was an interesting alternative, unfortunately not further discussed in the report.  Advance payments could also possibly be linked with reserve funds.  And finally, he acknowledged the urgent need for appropriating $102.7 million for the smooth and continuous implementation of design and planning work, as outlined in the ACABQ report.

Mr. YANEZ (Venezuela) said his delegation attached particular attention to the question and would make additional comments during consultations on the matter. Given the urgency of having adequate premises for the Organization's work, his delegation required additional information on the report. He shared the ACABQ's concern regarding the need for more detailed information for the strategies outlined in the Secretary-General's report.  One of the four options had been highlighted more, giving the impression that the others had not been sufficiently analysed. He was sorry to see that part of the work done on the basis of resolution 57/92 had been a waste of time and money.

He emphasized the need for the Committee to pay attention to the reason why mistakes had been made in earlier decisions regarding the plan, so as not to repeat them. He was struck by the increase in costs and the offer by the host country, as well as various offers for funding. He also drew attention to the special responsibility of the host country vis-à-vis the Organization, bearing in mind the many benefits to it because of the Organization's presence, such as the generation of income and employment. Specific information on such benefits would be useful, as they were relevant for the negotiations.  He also asked for more information on the impact of inflation rates on the Plan's financing.

Introduction of Reports

WARREN SACH, Controller, introduced the Secretary-General's report on the liabilities and proposed funding for after-service health benefits. The report dealt with accounting and funding issues, recommending that the United Nations recognize accrued liabilities with the after-service health insurance programme and that it initiate a funding strategy with the aim of full funding of the programme. Health insurance protection for staff and retirees continued to be an important element in the overall conditions of service of international civil servants.  In contrast to the Pension Fund, the Organization subsidized the after-service health insurance programme on a pay-as-you-go basis, with funds appropriated on a biennial basis in the programme budget under miscellaneous expenses. During 1980-1981, the total number of staff enrolled in the programme was 400. By 2002-2003, the number had grown to 7,100.

He noted that the disclosure of liabilities was acceptable under United Nations accounting standards.  However, best accounting practices now required accounting on a full accrual basis, and retiree health benefits must be reported and expensed as they were earned. The liability should be recognized when an employee had provided service in exchange for benefits to be paid in the future. The current report recommended approval of recognition of accrued after-service health insurance liabilities as required under international accounting standards. The recognition of liability on financial statements was a first step to bring the United Nations in line with best accounting practices and international standards. The cost of medical treatments continued to increase. The average age of participants had also increased, as had life expectancy. As those trends were expected to continue, it was prudent to adopt a funding policy that supported the process, to ensure that adequate funds were put aside to meet future benefit liabilities.

Mr. SAHA, Acting Chairman of the ACABQ, introduced that body's related report, noting that the issue was extremely important and of long-standing concern. The report had a number of shortcomings that needed to be addressed.  Updated data should be made available on potential after-service health insurance liabilities.

Mr. HODGES (United Kingdom), speaking on behalf of the European Union and associated States, said that the report before the Committee was a welcome first step, but it related to an obviously technical and complex issue with wide-reaching financial implications. It would require careful consideration by the Committee, when it had ample time to do so.

Mr. SACH recalled that the Advisory Committee had made a number of queries in connection with the report, including the figure of $393 million estimated in respect of staff currently in service and not eligible to retire. Inclusion of such liabilities was part of any sound methodology for estimating future requirements. Based on previous experience, not all staff would become eligible, or want to participate in the programme, and he had confidence in those estimates. The ACABQ had also asked about the basis for recommending a transfer of $250 million of unencumbered balance under peacekeeping accounts to begin an established fund for after-service health insurance. That would be a way of beginning to recognize the liability. It was a better alternative than an assessment, although it also involved not returning the balance to Member States.  However, it was a pragmatic financing mechanism. The recommendations addressed in paragraph 11 of the ACABQ report had been made following the same logic: there was an under-recognition of liabilities and it was necessary to close the gap.

Regarding proposals for the use of income from medical and dental reserves, he assured the Committee that those amounts would be available for transfer without endangering those funds. As for the time factor mentioned by the representative of the United Kingdom, he agreed that the Committee would have no time to carefully consider the issue in the coming days, but it was a problem that would not go away. The longer action was deferred, the bigger the problem would become. It would also become less manageable. Thus, he recommended an early return to considering the issue.

UNFIP

ANGEL SILVA, of the United Nations Fund for International Partnerships, introduced the report contained in document A/60/327. He said that the information contained in the document had been superseded by this year's events.  The programme had continued to grow and now involved over 365 projects. By the end of the year, it was expected to approach $800 million. The UNFIP continued to evolve as a full partner of the United Nations Foundation in advocacy and in facilitating partnerships with the private sector and foundations for the United Nations, especially when seeking their support for the Millennium Development Goals. The UNFIP continued to attract and foster additional partnerships, networks and alliances with a variety of actors. 

He added that as a result of the tsunami emergency, delegations were aware of the outpouring of support from all quarters, including individuals and the private sector. In addition to committing $5 million of its core funds, UNFIP had mobilized in excess of $100 million from private sector donors and non-governmental organizations to work through the United Nations to help the victims, offered to help channel contributions from the private sector to the United Nations and established the Tsunami Relief Fund, which provided tax advantages to donors. The UNFIP supplemented those efforts by providing assistance and advice on the acceptance of private sector contributions.

NONYE UDO (Nigeria) asked several questions, including what projects UNFIP would focus on in 2005-2006 and if the UNFIP board changed annually. She also wished to know if there was a compilation of the contributions the Fund received, which could be annexed to future reports.

Responding, Mr. SILVA said UNFIP was currently undergoing a transition to new ways of working and new focuses. Programmatic priorities of the Fund remained intact, however, including children's health and the environment. He expected the programme focus to stay the same in the next two years. The membership of the UNFIP board remained fairly stable over the years. There was provision for intergovernmental representation.  The information on UNFIP in 2005 would be available in the Secretary-General's next report.  That information could provide details on the sources of the UNFIP's funds.

The Committee then adopted the draft decision by which the General Assembly would take note of the Secretary-General's report (document A/60/327).

Action on Draft

The Committee then took up a draft resolution on the estimates in respect of special political missions (document A/C.5/60/L.9), by the terms of which the Assembly would approve the budget for the United Nations Office in Timor-Leste in the amount of some $23.78 million gross for the period 21 May to 31 December 2005.

Noting that requirements for the Timor-Leste Office, after taking into account the savings of some $6.3 million under the United Nations Advance Mission in the Sudan, amount to some $15.64 million ($17.48 million gross), it would decide to appropriate an amount of some $15.64 million under section 3, Political affairs, of the programme budget for 2004-2005, for the United Nations Office in Timor-Leste.

Acting on a request from a representative of France, who said that in informals, the draft had not been read in all official languages, the Committee then proceeded to approve the text paragraph by paragraph, without a vote.  France's representative pointed out a typo in the French version of paragraph 5.

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