ISSUES - ADMINISTRATIVE AND FINANCIAL MATTERS

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ISSUES IN THE NEGOTIATING PROCESS
Administrative and financial matters

Background

At its first session (Berlin, March/April 1995), the COP established the financial procedures of the Convention as well as four trust funds, namely:

The Special Trust Fund for the Core Administrative Budget of the UNFCCC (the "core budget";
The Special Trust Fund for Facilitating Participation of Parties in the UNFCCC Process (the "participation fund");
The Special Trust Fund for the Voluntary Supplementary Financing of the approved activities under the UNFCCC (the "trust fund for supplementary activities");
The Special Trust Fund for the Host Country Contribution to the UNFCCC (the "Bonn Fund").

The core budget is funded by indicative contributions from all Parties, based on the United Nations scale of assessment. The financial procedures also call for Parties to make voluntary contributions to the core budget, the participation fund, and the fund for supplementary activities. The SBI regularly reviews the status of contributions to the funds.

Every two years, the Executive Secretary proposes a programme budget to the SBI, setting out the proposed activities of the secretariat for the coming biennium and the funds needed to cover these. The SBI considers the proposal, and forwards a recommended programme budget to the COP for its approval. The financial procedures require the Executive Secretary to provide interim and final reports on the allocation of funds and on their use.

At SBI 12 (June 2000), Parties initiated a discussion on how to respond to the late payment of contributions. This discussion continued at SBI 13 part I (September 2000) and a draft decision was forwarded to SBI 13 part II (meeting together with COP 6 in The Hague, November 2000) for further consideration. In view of time constraints, however, Parties decided to postpone further discussion until after COP 6.

The SBI also considers other financial and administrative matters under this item, including the implementation of the headquarters agreement of the secretariat and the institutional linkage between the UNFCCC and the United Nations.

Latest developments

At SBI 14 (meeting together with COP 6 part II in Bonn, July 2001), Parties decided to recommend for adoption by COP 7 (Marrakesh, October/November 2001) a total budget of US$32,837,100 for the biennium 2002-2003, including up to US$5,000,000 drawn from available resources carried over from the current and previous financial periods. Parties also requested the Executive Secretary to prepare a revised programme budget, including a revised staffing table, reflecting the budgetary implications of decisions completed at COP 6 part II.

SBI 14 also recommended a decision to COP 6 part II, which was later formally adopted by the COP, extending the institutional linkage of the UNFCCC secretariat to the United Nations for a further five years.

In addition, SBI 14 heard reports on the implementation of the headquarters agreement, including on the provision of office space and the issuance of visas and travel permits. It also reviewed the status of financial contributions to the budget.

Next steps

SBI 15 (meeting together with COP 7 in Marrakesh) will consider the revised programme budget and staffing table prepared by the Executive Secretary, with a view to recommending it for adoption by COP 7.

The SBI will also review the latest status of financial contributions, and continue its discussions on how to respond to the late payment of contributions. In addition, it will consider information provided by the secretariat on interim financial performance for the biennium 2000-2001. A representative of the host government (Germany) and the Executive Secretary will report on progress in the implementation of the headquarters agreement.

Documents prepared for the upcoming session

FCCC/SBI/2001/17 and Add.1	Programme budget 2002-2003: Work programme of the secretariat and resource requirements
FCCC/SBI/2001/16	Income and budget performance 2000-2001: Interim report as at June 2001
FCCC/SBI/2001/INF.10	Status of financial contributions as at 15 October 2001
FCCC/SBI/2001/INF.5	Interim financial performance 2001-2002: Unaudited financial statements for 2000-2001 as at 31 December 2000

Relevant COP decisions and key SBI conclusions

Decision 6/CP.6	Institutional linkage between the UNFCCC and the United Nations
Decision 3/CP.6	Administrative and financial matters
Decision 20/CP.5	Programme budget for the biennium 2000-2001
Decision 21/CP.5	Income and budget performance in the biennium 1998-1999 and arrangements for administrative support to the Convention
Decision 15/CP.3	Programme budget for the biennium 1998-1999
Decision 17/CP.1	Adoption of the Convention budget for the biennium 1996-1997
Decision 15/CP.1	Financial procedures of the Convention
Report on SBI 14	Paras. 31-58
Report on SBI 13 part I	Annex II (containing a draft decision on the late payment of contributions)

Key documents prepared for earlier sessions

FCCC/SBI/2001/4	Proposed programme budget for the biennium 2002-2003
FCCC/SBI/2001/5	Institutional linkage between the UNFCCC and the United Nations
FCCC/SBI/2001/INF.2	Revised indicative contributions (pursuant to a UN General Assembly resolution revising the UN scale of contributions)
FCCC/SBI/2001/INF.3	Status of contributions as at 30 June 2001
FCCC/SBI/2000/8	Financial performance, 1998-1999 and interim report for 2000. Note by the Executive Secretary
FCCC/SBI/2000/9	Audited financial statement for the biennium 1998-1999 and report of the Board of Auditors. Note by the Executive Secretary
FCCC/SBI/2000/2	Late payment of contributions: response options. Note by the Executive Secretary

This agenda item is supported by the Financial Management and Administration Sub-Programme