Distr.
GENERAL
FCCC/SBI/1997/18
30 September 1997
Original: ENGLISH
SUBSIDIARY BODY FOR IMPLEMENTATION
Seventh session
Bonn, 20-29 October 1997
Item 9 of the provisional agenda
ADMINISTRATIVE AND FINANCIAL MATTERS
Financial performance of UNFCCC: Contributions
and expenditures in
1996 and 1997, and forecast for the biennium
1996-1997
Note by the Executive Secretary
CONTENTS
Paragraphs Page
INTRODUCTION 1 - 6 3
Mandate 1 3
Scope of the note 2 - 5 3
Possible action by the Subsidiary Body for
Implementation 6 3
II. TRUST FUND FOR THE CORE BUDGET OF THE UNFCCC 7 - 37
4
A. Status of contributions 7 - 9 4
Expenditure and delivery 10 - 35 4
C. The working capital reserve 36 - 37 10
GE.97-
Paragraphs Page
III. TRUST FUND FOR PARTICIPATION IN THE UNFCCC
PROCESS 38 - 41 10
IV. TRUST FUND FOR SUPPLEMENTARY ACTIVITIES 42 - 47
11
Regular contributions 42 - 43 11
Special contribution of Germany - the "Bonn Fund" 44 - 47
11
I. INTRODUCTION
A. Mandate
- The first report on the financial performance of the United
Nations Framework Convention on Climate Change (UNFCCC) was
submitted by the Executive Secretary to the Conference of the
Parties (COP) at its second session (see FCCC/CP/1996/7). The COP
subsequently requested that the Executive Secretary submit to the
COP at its third session
(COP 3), through the Subsidiary Body for Implementation (SBI), a
second report on the financial performance of the UNFCCC in the
biennium 1996-1997 (see decision 16/CP.2). This note responds to that
request.
B. Scope of the note
- This note contains information on income, expenditure, and
other related budgetary issues for all three of the UNFCCC trust
funds: the Trust Fund for the Core Budget; the Trust Fund for
Participation in the UNFCCC Process; and the Trust Fund for
Supplementary Activities. The note should be read together with
document FCCC/SBI/1997/INF.7, which contains supporting tables.
- In relation to the Trust Fund for the Core Budget, this note
contains information on income and expenditure in 1996 and 1997.
It also contains a brief report on programme delivery, and
explanatory notes on areas where the actual levels of expenditure
have differed significantly from the levels approved by the COP
(see section II).
- Income and expenditure data, short activity reports, and
information on related issues are also presented for the Trust
Fund for Participation in the UNFCCC Process and the Trust Fund
for Supplementary Activities (see sections III and IV,
respectively).
- All expenditure information reflects expenditures recorded in
the official accounts through 31 July 1997. In some cases,
expenditures to the end of 1997 have been projected.
C. Possible action by the Subsidiary Body for
Implementation
- The SBI may wish to recommend a decision to the COP for
adoption that:
- Takes note of the information provided in this
document and the supporting tables;
- Approves the creation of a new trust fund for the special
annual contribution of
DM3.5 million from the Government of Germany to finance events in
Germany
(see paragraphs 44-47), and requests the Executive Secretary to
request the Secretary-General to establish the new trust fund, to be
managed by the Executive Secretary;
- Urges Parties that have still not paid their 1996 and/or 1997
contributions to the core budget to do so without delay;
- Requests the Executive Secretary to submit to the COP at its
fourth session, through the SBI, as appropriate, a final report on
financial performance in the biennium
1996-1997, including audited financial statements, and initial
financial performance in 1998; and
- Approves transfers between the main appropriation lines to
cover
over-expenditures, for the Policy-Making Organs programme and the
Implementation and Planning programme, in excess of the 15 per cent
transfer within each of the main appropriation lines that the
Executive Secretary is at present authorized to make (see decision
17/CP.1,
para. 5).
II. TRUST FUND FOR THE CORE BUDGET OF THE
UNFCCC
A. Status of contributions
- As of 31 August 1997, contributions to the UNFCCC core budget
trust fund amounted to $10,386,691, or 75 per cent of the biennial
total. This total represents contributions paid in full for both
years of the biennium by 46 Parties, and in part by 33 Parties.
There are 87 unpaid contributions for 1996 (totalling $0.372
million) and 110 unpaid contributions for 1997
(totalling $3.877 million). Further details on the status of
contributions can be found in table 2 in document
FCCC/SBI/1997/INF.7.
- The Executive Secretary would like to call Parties' attention
to the serious cash flow problems that have arisen as a result of
late payment of contributions to the core budget. At the time of
writing, the largest contribution had just been received, and four
of the ten largest contributions were still outstanding, these
four contributions amounting alone to 26 per cent of the 1997
budget. The Executive Secretary urges all Parties which
have not paid their contributions for the past and/or current year
to do so as soon as possible. He also requests all Parties to bear
in mind that contributions to the core budget are due on 1 January
of the year in question.
- Since the last financial performance report, ten States
ratified or acceded to the Convention (six in 1996 and four in
1997), bringing the total number of Parties to 167. In accordance
with standard practices of the United Nations, contributions from
new Parties are pro-rated for the year in which they become
Parties.
B. Expenditure and delivery
1. Secretariat-wide overview
- Actual expenditures recorded through 31 July 1997, plus
estimated expenditures to the end of 1997, total $11,122,300, an
amount equivalent to approximately 76.5 per cent of the total
expenditure level approved by the COP at its second session (COP
2) (see decision 16/CP.2). Tables 3(a) and 3(b) in document
FCCC/SBI/1997/INF.7 contain breakdowns of recorded expenditure by
programme and object of expenditure, respectively. This
expenditure pattern is roughly in accord with the contributions
described in paragraph 7 above, and reflects the Executive
Secretary's desire to exercise prudence in the financial
management of the Convention funds.
- No additional resources are requested for the
biennium. There are no adjustments from the 1996 and 1997 figures
approved at COP 2.
(a) Staff costs and issues
- This reporting period has seen an unusually high vacancy rate
at the secretariat. As was reported to COP 2 (see FCCC/CP/1996/7,
para. 19), this situation can be attributed predominantly to cash
flow uncertainties and the losses in personnel resulting from the
move to Bonn. These gaps in the secretariat's staff were filled
largely by short-term staff members and consultants, which led to
higher expenditure levels for these items than originally
estimated. It is anticipated, however, that most vacant posts will
be filled by the end of 1997.
- As was outlined in the previous financial report (see
FCCC/CP/1996/7, paras. 35-36),
the relocation to Bonn required the reassignment of many staff
members to different tasks -- either to take up move-related tasks or
to ensure that key activities continued throughout the transitional
period. A formal redeployment of posts or restructuring was deemed by
the Executive Secretary as unnecessary. The experiences of the past
two years were, however, used as the basis for preparing the new
staffing plan and structure agreed to by the SBI at its sixth session
(see FCCC/SBI/1997/16, paras. 27-28).
- Currently, no core budget posts are being funded through
bilateral arrangements with governments and organizations. In
1996, contributions from governments were used to fill four such
posts, but by the end of that year, all contributions had either
ended or been shifted to supplementary funding. The few staff
members who continue to be provided bilaterally to supplement the
secretariat's core staff are all scheduled to remain in Bonn only
through the middle or end of 1998.
(b) Other costs and issues
- As a result of under-staffing, travel costs during this
reporting period have been somewhat lower than anticipated.
Information technology-related requirements have been higher, due
to the need for additional work stations and software licenses and
the corresponding need to upgrade the network and web server
facilities. Replacement of some obsolete equipment has also been
necessary. Expenditure for common services (included under the
line item for 'other expenditures') has been lower than originally
planned, based on actual experience in Bonn and delay in receipt
of invoices.
2. Policy-Making Organs
- The COP and all four of its subsidiary bodies met during a
two-week session in July 1996 at Geneva. A total of 147 Parties
attended, in addition to 14 observer States and 135 observer
organizations (including both intergovernmental and
non-governmental organizations). The Conference was attended by
1,077 delegates and 647 observers. The subsidiary bodies have
subsequently met during three additional two-week sessions as
follows:
(a) December 1996 (Geneva; 130 Parties, 6 observer States, 103
observer organizations; total of 516 delegates and 337
observers);
(b) February/March 1997 (Bonn; 130 Parties, 9 observer States, 113
observer organizations; total of 540 delegates and 326 observers);
and
(c) July/August 1997 (Bonn; 136 Parties, 9 observer States, 125
observer organizations; total of 615 delegates and 512
observers).
- As a result of four sessions being held in 1997 (instead of
two, as foreseen during discussion of the programme budget for the
current biennium), expenditures relating to
policy-making organs have been approximately 19 per cent higher
than anticipated.(1) This exceeds the
authority granted to the Executive Secretary to increase the
appropriation by up to 15 per cent (see decision 17/CP.1, para. 5).
The Executive Secretary requests approval of the COP for a transfer
from other budget lines to meet this expenditure.
- The contribution to the Intergovernmental Panel on Climate
Change (IPCC), set by the COP at a level of $310,600 for each year
of the current biennium, was paid in November 1996 and will be
paid later in 1997.
3. Executive Direction and Management (EDM)
programme
- The outputs of the Executive Direction and Management (EDM)
programme have been consistent with those described in paragraph
12 of the annex to the programme budget submitted for the current
biennium (see FCCC/CP/1995/5/Add.2). The Executive Secretary has
provided on-going management and co-ordination of the
secretariat's activities, as well as guidance to the Convention
bodies. He has also represented the interests of the UNFCCC at
various conferences and intergovernmental meetings. Much of his
time, and that of his staff, has been devoted to overseeing the
installation of the secretariat in Bonn.
- Expenditures for this programme have not differed
substantially from those approved by COP 2 (see decision 16/CP.2).
4. Communication, Assessment and Review (CAR)
programme
- The Communication, Assessment and Review (CAR) programme has
co-ordinated the secretariat's support to the Subsidiary Body on
Scientific and Technological Advice (SBSTA) and the Ad Hoc Group
on Article 13 (AG 13). It has also produced documentation for
submission to these bodies as well as to the SBI. Topics covered
include methodological issues, cooperation with the IPCC and other
international bodies, technology and technology information needs,
and the establishment of a multilateral consultative process.
- Regarding national communications, the programme has continued
to conduct in-depth reviews of first national communications from
Annex I Parties and publish reports. The reviews of the first
series of communications have now been completed. The CAR
programme has also distributed the national communications
submitted by Annex I Parties, prepared the first compilation and
synthesis report on second national communications from Annex I
Parties, and prepared for in-depth reviews of second national
communications. In addition, it has collected, published and
disseminated greenhouse gas (GHG) inventory information,
maintained a database of GHG inventories, and identified
methodological issues related to reporting inventories,
projections and policies and measures that need further
elaboration.
- The CAR programme has been working with rosters of experts
nominated by governments in two areas, namely, technological
issues and in-depth reviews. It has also co-ordinated support from
other intergovernmental organizations, in particular the
Organisation for Economic
Co-operation and Development, the International Energy Agency, and
the United Nations Industrial Development Organization.
- Expenditures for the CAR programme in this biennium have been
much lower than previously anticipated. Most of this is
attributable to the large number of vacant posts in this programme
throughout the end of 1996 and the first half of 1997, which has
resulted in lower staff and travel-related costs. This situation
is now being corrected, and most vacancies are expected to be
filled by the end of the year.
5. Financial and Technical Cooperation (FTC)
programme
- The Financial and Technical Cooperation (FTC) programme has
co-ordinated the secretariat's support for the SBI. Since the last
financial report, documents have been prepared and submitted to
the SBI by this programme on a variety of topics, including the
Memorandum of Understanding between the COP and the Council of the
Global Environment Facility (GEF), the review of the financial
mechanism, and secretariat activities to facilitate the provision of
financial and technical support to non-Annex I Parties.
- In addition, the FTC programme has represented the UNFCCC in
meetings of the GEF Operations Committee and the GEF Council.
Through its bilateral and multilateral partners, it has continued
to facilitate the provision of financial and technical support to
Parties for implementation of the Convention. It has made
presentations at eleven regional workshops on issues related to
the preparation of national communications. It has also submitted
documents to the SBSTA on various subjects related to activities
implemented jointly (AIJ) under the pilot phase, organized three
workshops on methodological issues related to AIJ, and convened
various meetings and events on AIJ in the margins of official
sessions of the UNFCCC.
- Expenditures for this programme in the current biennium have
been substantially lower than predicted. As in the CAR programme,
this is mainly due to the large number of vacant posts in this
programme throughout the end of 1996 and first half of 1997.
6. Intergovernmental and Information Support (IIS)
programme
- During this reporting period, the Intergovernmental and
Information Support (IIS) programme has managed all aspects
relating to the organization of four official sessions of the
Convention bodies. This has included liaising with the managers of
conference facilities, editing and arranging for the translation
and reproduction of all documentation, hiring and training
temporary conference staff, liaising with the United Nations
Office at Geneva for the provision of conference servicing, and
registering delegates. These activities have become more
resource-intensive since August 1996, given the physical distance
between Bonn and the provider of conference services in Geneva, the
limited availability of suitable conference facilities, and the
number of sessions scheduled in 1997. Conference-related activities
have been funded from a combination of sources: support costs have
been covered from the core fund, while facility costs have been
covered from the Bonn Fund (see paragraphs 44-47).
- The IIS programme has also maintained the secretariat's
information technology systems (including both permanent and
temporary computer networks), and produced a variety of
information products. The latter have included a redesigned World
Wide Web site, a second
CD-ROM, a CC:INFO/Web tutorial kit, a directory of participants in
the UNFCCC process, a CC:INFO report on activities related to climate
change, and a variety of information packages and brochures. Support
costs for these activities have again been covered through the core
fund, whereas individual specialized projects have been financed
through supplementary funding.
- The programme's ad hoc responsibilities relating to
relocation, which consumed a large portion of its resources in
1996, ended once the secretariat and its staff were fully
installed in Bonn. In order to allow IIS to dedicate more of its
resources to conference and information support, the task of
providing administrative support to the secretariat was shifted to
a
newly-created administrative unit (which operates under the
auspices of the Implementation and Planning (I+P)
programme).
- Expenditure levels for IIS have been lower than expected for
this biennium. This can be explained by the facts that two of the
senior posts for the programme were vacant for over a year, that
the task of secretariat-wide administration was transferred to the
I+P programme, and that the generally high vacancy rate at the
secretariat resulted in lower support costs.
7. Implementation and Planning (I+P)
programme
- The I+P programme has provided support for the Ad Hoc Group on
the Berlin Mandate (AGBM), in the form of preparing documents,
organizing informal consultations, and providing support to the
Chairman. The AGBM-related workload, which has steadily increased
throughout the biennium, is expected to consume much of the
programme's resources to the end of 1997. The programme will
additionally assume responsibility for the functions of secretary
of COP 3, including support to the President and the Bureau and
substantive arrangements for the plenary and the Committee of the
Whole. The programme has also processed all proposed amendments to
the Convention and provided support to the President of the COP in
his consultations on the rules of procedure.
- The I+P programme has also played an important role in the
management of UNFCCC funds and, since August 1996, has assumed
responsibility for the administration of the secretariat. Related
tasks have included providing support to the Executive Secretary
in the preparation of a programme budget for the biennium
1998-1999, and liaising with the Government of Germany regarding
the host country agreement.
- Expenditures relating to the I+P programme have exceeded
earlier forecasts by
45 per cent. This is related to the addition of AGBM support and
secretariat-wide administration to the I+P work programme (neither of
which was envisaged when the original programme budget was put
together). Much of the resources for administration are provided from
funds made available for this purpose from the 13 per cent overhead
charge paid to the United Nations. While discussions are continuing
with the United Nations on the conditions applied to the use of these
overhead funds, core budget funds have had to be spent for temporary
staff to maintain day-to-day operations. It is hoped that these
discussions will result in a reduction in I+P programme expenditures
by transferring these to the overhead account.
- In view of the situation described above, and pending the
results of the discussions with the United Nations, the Executive
Secretary requests approval of the COP for over-expenditure in the
I+P programme.
C. The working capital reserve
- The COP at its first session (COP 1) decided that a working
capital reserve should be
maintained within the Trust Fund for the Core Budget (see decision
15/CP.1, annex I, para. 14). The purpose of this reserve, the level
of which is to be determined from time to time by the COP by
consensus, is to "ensure continuity of operations in the event of a
temporary shortfall of cash. Drawdowns from the ... reserve shall be
restored from contributions as soon as possible." The
level of the reserve was set at 8.3 per cent of estimated
expenditure for both 1996 and 1997
(see decision 17/CP.1, para. 1, as confirmed in decision 16/CP.2,
para. 6). The SBI at its sixth session recommended that the reserve
should continue to be maintained at this level in 1998.
- The working capital reserve currently amounts to $699,000 and,
to date, no drawdowns have been necessary. Should outstanding
contributions to the core budget not be forthcoming, it is likely
that drawdowns will be necessary before the end of 1997.
III. TRUST FUND FOR PARTICIPATION IN THE UNFCCC
PROCESS
- As defined by COP 1, the purpose of this Fund is to finance
the participation of representatives of developing-country
Parties, particularly those that are least developed countries or
small island developing States, and of other Parties with
economies in transition, in sessions of the COP and its subsidiary
bodies (see decision 15/CP.1, annex I, para. 15). By its decision
16/CP.2, the COP decided that the Fund could also be used to
finance participants from eligible Parties in meetings of expert
bodies convened by any of the Convention bodies and in
intersessional meetings of the Bureaux of the Convention bodies,
and for the participation of Bureau members in consultations or
official meetings relating to the UNFCCC process. All expenditures
are subject to the availability of resources. The current
eligibility criterion for receiving support is that a Party's per
capita gross domestic product was $5,500 or less in 1994. To
assist in allocating scarce resources, a second criterion has
recently been added. In the case that a Party's indicative share
of the core budget was greater than $1,000 in 1996, its
contribution for 1996 is to be paid in full to ensure eligibility
in 1997.
- This Fund benefited at the start of the biennium from a
carryover of $1,169,251 from the special voluntary fund for
participation and $287,500 from a contribution for COP 3.
Additional contributions to the Fund during the biennium have
amounted to $2,398,936 ($1,370,543 in 1996 and $1,028,393 in
1997). Net expenditure has totalled $2,245,554, representing
funding for participation at five official sessions of the
Convention bodies listed below:
(a) February/March 1996 (Bonn; funding offered to 114 Parties, 92
delegates financed);
(b) July 1996 (Geneva; funding offered to 116 Parties, 147
delegates financed);(2)
(c) December 1996 (Geneva; funding offered to 122 Parties, 84
delegates financed);
(d) February/March 1997 (Bonn; funding offered to 123 Parties, 89
delegates financed); and
(e) July/August 1997 (Bonn; funding offered to 124 Parties, 93
delegates financed).
- Funding has been offered to 104 Parties for the current
session; related expenditures are expected to total about
$400,000. For COP 3, it is anticipated that funding will also be
offered to about 125 Parties. As has been the practice in the
past, resources will also be made available for a second delegate
from least developed country and small island developing State
Parties to participate in the COP, should funding permit. Related
expenditures are expected to total approximately $1,150,000
(including overhead charges and operating cash reserve, and
reflecting travel costs and allowances higher than those for
previous sessions of the COP).
- Detailed financial data on this Fund is provided in table 4 of
document FCCC/SBI/1997/INF.7.
IV. TRUST FUND FOR SUPPLEMENTARY
ACTIVITIES
A. Regular contributions
- During the biennium, contributions amounting to $2,296,493
have been received in this Fund ($1,277,072 in 1996 and $1,019,421
in 1997). Expenditure has totalled $515,251, net of overhead
charges and operating cash reserve; obligated funds total a
further $674,607. Activities financed from this Fund include the
production of CC:INFO information products, the convening of two
workshops on methodological issues related to AIJ, the development
and production of a CC:INFO/Web tutorial kit (designed to assist
Parties in the creation of national Web sites on implementation of
the Convention), the organization of a CC:INFO/Web workshop, and
the provision of staff support to the CAR, FTC and I+P programmes.
- Additional financial information on the Trust Fund for
Supplementary Activities can be found in table 5 of document
FCCC/SBI/1997/INF.7.
B. Special contribution of Germany - the "Bonn
Fund"
- As part of its offer to host the secretariat, the Government
of Germany pledged a special annual contribution to the UNFCCC to
offset the costs primarily of organizing meetings and events in
Germany. An overview of this contribution, which is referred to as
the "Bonn Fund", is contained in table 6 of document
FCCC/SBI/1997/INF.7.
- The level of this contribution for 1996 was originally set at
DM3,000,000, with an additional contribution of DM500,000 pledged
to the Trust Fund for Participation in the UNFCCC Process. As a
result of DM1,000,000 being deferred to 1997 and the contribution
for participation increasing to DM630,000, the contribution for
the year ultimately amounted to DM1,870,000. This funding, which
is subject to standard overhead and working capital reserve
charges, was used for organizing and servicing intergovernmental
meetings (DM355,500), for
informal meetings and workshops (DM138,100), for climate change
information products (DM243,500), and for infrastructure and
logistics related to the relocation to Bonn (DM288,000).
- In 1997, the level of the contribution was set at DM4,500,000.
Based on actual and predicted expenditures, it is estimated that
the bulk of this funding will be used to support the organizing
and servicing of intergovernmental meetings (about DM3,142,400).
Much smaller amounts will be used to support informal meetings and
workshops (DM43,200), climate change information products
(DM376,000), and for Bonn infrastructure (DM73,500).
- The Executive Secretary considers that the creation of a
separate, new trust fund for this regular annual contribution
would greatly simplify day-to-day financial management of the
secretariat. Subject to approval by the COP, such a trust fund
could be established by the Secretary-General and managed by the
Executive Secretary (see the financial procedures, decision
15/CP.1, annex I, para. 16). The SBI is invited to
recommend that such a trust fund be established.
- - - - -
1. Despite the heavy meeting schedule,
overexpenditure was limited to 19 per cent due to economies of scale,
internal reassignment of tasks, the hiring of temporary staff and
consultants under other programmes, and chronic overtime of staff.
This extraordinary situation would not be sustainable in the future.
2. Funds were available to finance
participation of a second delegate from least developed country and
small island developing State Parties.