Informal consultations on budgetary questions: draft conclusions on budgetary structure, presentation, governance and other matters

EC/1995/SC.2/CRP.24

EXECUTIVE SUMMARY

The Informal Consultations have allowed a thorough review of the various factors that condition UNHCR's budget structure. At the heart of the consultations has been the distinction between General and Special Programmes and the governance of the Executive Committee, particularly over the latter.

There is consensus that UNHCR's budget structure should allow priority to be given to the statutory activities of UNHCR, provide the High Commissioner with the flexibility necessary to respond effectively to needs, and allow the Executive Committee to exercise governance and oversight commensurate with its responsibilities.

In theory, a single integrated budget and a resource base that provides a clear commitment to funding the statutory, and therefore priority, activities of UNHCR should meet these objectives. In practice, several key factors have made this unattainable; these relate to the nature of UNHCR's programmes and of its resource base.

Two types of programming and budgeting have therefore evolved: General and Special Programmes. There is recognition that the present structure was developed, under the guidance of the Executive Committee, to address the above objectives within a changing context. With the enhancements proposed herein and those others which are envisaged, it is felt that the present budget structure could provide a sound framework for the presentation of UNHCR's needs.

The draft conclusions set out in this paper seek to give further realization to the broad objectives of the budget structure set out above. They do this by the following:

(i) priority is given to statutory activities by moving these into General Programmes to the fullest extent possible, in accordance with criteria that have been clarified and on whose application the Executive Committee would be regularly informed;

(ii) where such transfers are not possible, at least some of the benefits of the allocations and reserves established within General Programmes would be available for statutory activities otherwise funded under Special Programmes, in accordance with criteria established or refined herein; this would in itself enhance the flexibility available to the High Commissioner;

(iii) further enhancement is proposed through an increase in the level of the Programme Reserve, expressed as a flexible percentage of programmed activities under the Annual Programme, and the establishment of the Voluntary Repatriation Reserve at a higher level, expressed as a flexible percentage of projected voluntary repatriation activities;

(iv) these proposals are matched by others with regard to the oversight to be provided by the Executive Committee on the use of these funds, and for regular review of General and Special Programmes at inter-sessional meetings of the Executive Committee.

(v) further provisions are made for the follow-up to the reports of oversight bodies such as the Board of External Auditors, the ACABQ, and UNHCR's Inspection and Evaluation Service.

Further opportunities for improvements to the budget structure and governance will be explored; it is recognized that the review is a continuing process.

I. INTRODUCTION

1. In the light of the informal consultations on UNHCR's Budget Structure, this paper presents a number of draft conclusions for the Executive Committee's consideration. These draft conclusions cover those issues around which some consensus appears to have developed in the informal consultations, as well as the issues on which further work is required. Background information is contained in brief introductions to the various groups of draft conclusions. In addition, draft conclusions are followed, where necessary, by an explanatory note on their implications. A series of annexes gives further information on the following: the issues that occasioned the consultations; the points raised in the course of the consultations; the history of the distinction between General and Special Programmes; and specific tables or information related to particular conclusions.

2. It is hoped that these draft conclusions could be adopted by the SCAF at its meeting on 20 June 1995, for endorsement by the Executive Committee at its annual meeting in October 1995 and implementation as soon as possible thereafter, unless otherwise indicated.

II. BACKGROUND

3. The current informal consultations were occasioned by the desire of the Executive Committee to explore a range of issues related to budgets, fund-raising, transparency and governance (see A/AC.96/839, para.24). More particularly, and as the report (A/AC.96/838) of the SCAF meeting on 29 September 1994 indicates, there has been a continuing concern on the part of some delegations as to the validity of the distinction between General and Special Programmes. In addition, questions as to the adequacy of the governance exercised by the Executive Committee over General and, in particular, Special Programmes, have been raised by delegations. (Annex 1 gives a fuller presentation on these concerns as expressed in recent years, beginning with the deliberations of the Executive Committee Working Group in 1989.)

4. The Informal Consultations were launched at the 16 January 1995 meeting of SCAF (EC/SC.2/72), when the subject of UNHCR's budget structure was considered. The Sub-committee had before it a paper (EC/1995/SC.2/CRP.5) which gave a preliminary presentation of the budgetary-related issues of concern to the Executive Committee. It was decided that to facilitate discussion on budgetary structure, funding and governance, the Sub-committee would initiate a process which would look at these issues in a systematic, but informal manner, under the guidance of the Chairman. In addition to a number of smaller informal consultations arranged by interested delegations or undertaken by UNHCR, the Chairman has convened three group meetings, on 22 March, 8 May and 7 June, 1995. The first such meeting (of short duration) had before it a paper prepared by a consultant: "Note on Issues Concerning UNHCR's Budget Structure". At the meeting on 8 May 1995, two further papers were considered: "Budget Structure: UNHCR's Preferred Option" and "Governance". (Annex 2 gives a report on these informal consultations.) The meeting on 7 June 1995 considered a preliminary draft of the present document.

5. Progress has been achieved in these meetings, though some questions remain for several delegations as to the justification for a budget structure built around a distinction between General and Special Programmes, as opposed to an integrated budget structure. (Annex 3 revisits this question.) On the issue of governance over the current General and Special Programmes, there is a broader consensus on the issues involved and a desire to ensure, in particular, enhanced governance over Special Programmes.

III. DRAFT CONCLUSIONS

6. In the light of discussions in the informal consultations to date, draft conclusions related to a number of areas of concern have been prepared. These are set out below, with introductory notes and, where necessary, comments on their implications.

A. Budget Structure

1. Introductory Note

7. As mentioned above, a basic issue in the Informal Consultations has been that of budget structure. The majority of delegations are in favour of a budget structure that safeguards the existing one which is built around a distinction between General Programmes and Special Programmes; this structure, which is made up of a series of self-contained parts which allow, inter alia, for some prioritization of activities (namely, the statutory activities¹ that can be accommodated under General Programmes) and operational flexibility, is felt by its proponents to have proved its value in a climate of growing unpredictability both as regards emergencies and funding to respond to them. Several delegations, however, have stressed, for reasons of better transparency, while safeguarding operational flexibility, the benefits of a more integrated and/or unified budget which, inter alia, would give a better picture of what is happening at the country level.

8. The following draft conclusions seek to confirm the perceived value of certain of the elements found in the current budget structure, while recognizing the need for further work on the question of budget structure.

2. Draft Conclusions on Budget Structure

Conclusion 1: Any UNHCR budget structure should have as its objectives the following:

(i) the necessary flexibility to address emergency situations and unexpected changes to programmes;

(ii) assured funding of statutory activities.

In addition, the budget structure must facilitate transparency, accountability and managerial control.

Conclusion 2: The Executive Committee recognizes that the objectives set out in Conclusion 1 (i) and (ii) are broadly being met by the current budget structure, made up of a number of self-contained but related components, built around General and Special Programmes.

Conclusion 3: Further streamlining of UNHCR's budget structure should be undertaken, however, bearing in mind the objectives set out in Conclusion 1, so that in a single, coherent budget structure there is a clear indication of overall needs, as well as of needs at the country level, and for Other Programmes and Headquarters.

3. Comments

9. The further work on UNHCR's budget structure referred to in Conclusion 3 above would be undertaken by the Secretariat, where necessary with the assistance of consultants. The Executive Committee would be consulted and kept regularly informed of progress (see Conclusion 21).

B. General and Special Programmes

1. Introductory Note

10. Following the introduction of country programming (1973) and programme budgeting (1974) by UNHCR, the two broad categories of General and Special Programmes were introduced into UNHCR's budgets in 1977 (see Annex 3). Whereas the initiatives relating to country programming and programme budgeting were inspired by programmatic considerations (for example, setting specific objectives, drawing up plans to meet the objectives, quantifying the resources required), the introduction of the two categories of General and Special Programmes, in spite of what their name might suggest, was in response to a reporting concern: how to report, within a framework established for UNHCR's activities deriving from its Statute, on those other, rapidly growing UNHCR activities which were "in addition to its original functions" (ECOSOC 2011 (LXI), but which had been undertaken by UNHCR at the request of the Secretary-General, with the concurrence of the General Assembly and ECOSOC.

11. It was decided that these Special Humanitarian Operations would be reported on like other trust funds managed by the High Commissioner. Hence the origin of the term "Special Programmes" to describe a series of activities funded by a range of distinct trust funds, each operating according to their own funding dynamic. The category of Special Programmes thus sought to give form and order to existing budgetary elements by grouping them together on the basis that they were funded in the same way, namely through trust funds. On the other hand, the General Programmes category was to embrace the remainder of UNHCR's activities, namely the traditional, statutory activities of UNHCR which made up the Annual Programme (and which were resourced through the General Fund 2/) and those covered by the Emergency Fund. By grouping Special Humanitarian Operations under Special Programmes, the criteria for inclusion under either category was implicitly established: the General Programme category was reserved exclusively for statutory activities included under the Annual Programme and those covered by the Emergency Fund; other activities were to be funded under Special Programmes.

12. With the growth in number and size of new UNHCR activities, these distinctions became blurred. New refugee emergencies, although statutory activities, were sometimes not able to be covered entirely by the Emergency Fund and, therefore, had to be resourced by special appeals (thereby creating a Special Programme funded by a Special Trust Fund). Similarly, some new statutory activities were not able to be included retroactively under General Programmes in a given year, or moved to General Programmes for the subsequent year, because of the constraints on resourcing General Programmes. The issue has become more complicated with the increase of large complex operations which have not only a mix of components (refugees, internally displaced, affected local populations) but whose size would often preclude the inclusion of the statutory components (even if they could realistically be separated out) under General Programmes. Similarly, recent large voluntary repatriation activities are increasingly a part of a broad international approach, with important inter-linked elements that go well beyond UNHCR's statutory activities. Throughout all these developments, however, one criterion has remained constant: only statutory activities may be included under General Programmes, that is, may benefit from General Funding. This does not preclude, however, statutory activities being funded under Special Programmes.

13. Thus only a portion of even statutory and sufficiently stabilized activities has been able to be incorporated into General Programmes. Under a regime of almost total voluntary funding (the United Nations Regular Budget covered only 2 per cent of total UNHCR expenditure in 1994), UNHCR needs to be assured at least of a level of predictable income which will cover the activities under General Programmes. Their level thus has to be realistically set, as approval by the Executive Committee implicitly carries with it the commitment to full funding, and this predictability is, of course, a function of their size.

2/ The Financial Rules of 31 July 1974 (A/AC.96/503) introduced an Article VI - FUNDS. Article 6.1 reads: There shall be established a General Fund to which all unspecified contributions, contributions for the Annual Programme, miscellaneous income and balances not required for the replenishment of the Working Capital and Guarantee Fund shall be credited. The same article is found verbatim in the current Financial Rules (A/AC.96/503/Rev.5 of 7 April 1993).

2. Draft Conclusions on General and Special Programmes

Conclusion 4: The criteria for the inclusion of activities under General Programmes is that they qualify as statutory; in addition, they should be activities related to situations which have stabilized.

Conclusion 5: The group of stabilized, statutory activities which constitute the General Programmes shall be a funding priority. A commitment to their full funding would be facilitated by a process of dialogue in which the High Commissioner explains the rationale used for the inclusion of the various activities within the Annual Programme component of the General Programmes.

Conclusion 6: If, for a given year, all stabilized, statutory activities were not able, in the High Commissioner's judgement, to be included under General Programmes, the first priority for inclusion should be refugee situations which have stabilized; in giving effect to this decision, the High Commissioner shall, inter alia, bear in mind the relative chances of funding for different activities, depending on the programme category in which they would be placed. The High Commissioner would report to the Executive Committee the considerations which determined a particular course of action.

3. Comments

14. Conclusions 5 and 6 again underline the important role of funding considerations in relation to the composition of General Programmes. These considerations include whether a particular refugee programme, because of the international attention it attracts, would have better chances of funding if it remained as a distinct Special Programme.

15. The priority proposed in Conclusion 6 for refugee situations as opposed to voluntary repatriation operations reflects the fact that the former are more likely to be in need of the predictability of funding implicit in General Programmes than the latter; moreover, the latter are often inherently more difficult to programme within an annual planning cycle.

C. Funds and Reserves

1. Introductory Note

16. Included under General Programmes there is a range of funding mechanisms which operate according to established criteria and which exist to ensure flexibility of response to: refugee emergencies; variations in the needs of programmes subsequent to their approval; and unexpected opportunities for voluntary repatriation. These funding mechanisms are the Emergency Fund, the Programme Reserve, and the General Allocation for Voluntary Repatriation. The current criteria governing their use and the history of the evolution in their levels are covered in Annex 4.

17. These mechanisms have provided UNHCR with much-needed flexibility, while their criteria provide the Executive Committee with safeguards as to their use. Faced with the evolution in the demands on UNHCR, it is proposed to redefine the uses of the Programme Reserve and the General Allocation for Voluntary Repatriation and increase their levels from 1997.

18. This proposal would not only provide additional flexibility to UNHCR, but is also formulated to allow statutory activities that are unable to be funded under General Programmes to at least benefit, where appropriate, from these General Programme funding mechanisms.

19. It is proposed to broaden the purposes of the Programme Reserve to assist refugee situations which for various reasons may not be able to be included, at a given moment, under General Programmes. To cover this broader use of the Programme Reserve, it is also proposed to increase its level.

20. It is proposed to redefine the uses of the General Allocation for Voluntary Repatriation and to reset, and effectively increase, its level. The general objectives of such an Allocation were first set out in 1991 in a document entitled: "Voluntary Repatriation: Resource Mobilization for Voluntary Repatriation Movements and Reintegration Assistance" (EC/SC.2/1991/CRP.18). The paper noted that: "UNHCR's responsiveness in the face of opportunities for voluntary repatriation would be considerably enhanced if it had recourse to an assured source of funding to meet short-term reintegration/rehabilitation costs. ... The availability of resources to meet such needs would enable the High Commissioner to engage in more concrete forward planning, especially in regard to the necessary measures to be taken on behalf of returnees in their country of origin, thus making repatriation a more viable proposition" (para. 17). The subject of resources for voluntary repatriation was expressly addressed in another paper: "Voluntary Repatriation: Possible Resource Provisions Under General Programmes" (EC/SC.2/1991/CRP.24/Rev.1). When it was decided to set aside resources for such a purpose, savings were found within the Annual Programme for 1992; hence the designation of the resources as a "General Allocation for Voluntary Repatriation" (GAVR). Since its institution, however, the GAVR has tended to be used for a broad range of purposes related to voluntary repatriation. The draft conclusion seeks to codify more closely this broader use; at the same time, it is proposed to increase the level of the GAVR by determining this at a higher percentage of projected voluntary repatriation activities than its current fixed level would have represented in 1995.

21. To reflect more closely the nature and purposes of these two resources, it might be more appropriate to consider them as distinct funds/reserves under the General Programmes, with a status comparable to the Emergency Fund. These funds would consequently be known as the Programme Reserve and the Voluntary Repatriation Fund and, for convenience, these terms are used hereafter.

22. It will also be noted that both the Programme Reserve and the Voluntary Repatriation Fund would be flexibly indexed to levels of certain activities; it is felt that this best reflects the dynamic nature of UNHCR's statutory activities (see Annex 4).

2. Draft Conclusions: Funds and Reserves, Their Levels and Criteria

Conclusion 7: The Executive Committee should keep under review the criteria governing the Emergency Fund, the Programme Reserve, and the Voluntary Repatriation Fund to ensure that these contribute to the flexibility of the Office's operations. Moreover, the levels of the latter two should be adjusted in a fashion linked to projected programme activity.

Conclusion 8: In recognition of the statutory nature of activities on behalf of refugees, and, therefore, their potential for inclusion under General Programmes, the Programme Reserve may be used for refugee situations being funded, for various reasons, under Special Programmes. Such a use of the Programme Reserve, would, nevertheless, be limited; it may be used to complement Special Programme funding for refugee situations, provided that the total of all such allocations does not exceed one third of the Programme Reserve in a given year.

Conclusion 9: In recognition of the importance of voluntary repatriation, and to support repatriation activities which were not able to be included, for various reasons, under General Programmes, the use of the Voluntary Repatriation Fund should be enhanced by its extension to voluntary repatriation operations included under Special Programmes; it is proposed that in a given year, an allocation of up to $ 10.0 million could be made for any such voluntary repatriation operation.

Conclusion 10: The proposed expanded use of the Programme Reserve and the Voluntary Repatriation Fund would require that their levels be raised. It is therefore proposed that, as of 1997:

(i) the Programme Reserve be constituted between 10 and 15 per cent of programmed activities under the Annual Programme for a given year;

(ii) the level of the Voluntary Repatriation Fund for a given year be set between 10 and 15 per cent of the budgetary estimates for voluntary repatriation for the previous year, or at $ 25 million, if this is higher than 15 per cent;

(iii) within the limits set out above, the High Commissioner will propose the actual levels of the Programme Reserve and the Voluntary Repatriation Fund for approval by the Executive Committee.

Conclusion 11: With a view to maximizing the use of the Programme Reserve and the Voluntary Repatriation Fund in any given year, any allocations made from them could be cancelled if sufficient contributions were later received for the relevant activities.

Conclusion 12: It is proposed to extend the use of the Working Capital and Guarantee Fund to guarantee budgetary increases to the General Programmes target, not exceeding 2 per cent of an approved target, that may result from increased costs directly due to exchange rate fluctuations. The Executive Committee would thus allow the General Programmes approved budgetary target to rise by up to 2 per cent, if this was necessary to accommodate such increased costs. The adjustment of the General Programmes budget target in accord with the above provisions, and related accounting adjustments, would take place at the end of a calendar year. If such a use had to be made of the Working Capital and Guarantee Fund, it would be replenished in the subsequent year in accordance with the provisions of the Financial Rules.

3. Comments

23. The Programme Reserve is currently calculated at 10 per cent of programmed activities under General Programmes; for 1995, the Programme Reserve was approved at a level of $ 33,674,200. In regard to draft conclusion 10 (ii), the last "Update on Voluntary Repatriation Movements" (EC/1995/SC.2/CRP.12) estimated the budget for 1995 voluntary repatriations at $ 251.1 million. The current approved level of the General Allocation for Voluntary Repatriation is $ 20 million. Thus, had Conclusion 10 (ii) been effective at 10-15 per cent of the budgetary estimates for voluntary repatriation, the "indexed" level of the Voluntary Repatriation Fund would have been between $ 25-37 million.

24. Conclusion 11 proposes extending to the Programme Reserve and the Voluntary Repatriation Fund, the practice of re-crediting the Emergency Fund (or cancelling allocations) if sufficient contributions are received for the relevant activities.

25. Of the various ways to cope with exchange fluctuations and their impact on the General Programmes target, that proposed in Conclusion 12 would appear to be the most efficient.

D. Governance

1. Introductory Note

26. The governance by the Executive Committee over the Programme of the United Nations High Commissioner for Refugees derives from General Assembly Resolution 1166 (XII) of 26 November 1957 and ECOSOC resolution 672 (XXV) of 30 April 1958. The former called on ECOSOC to establish the Executive Committee and proposed its terms of reference; the latter established the Executive Committee with functions reflecting the terms of reference set out in the former.

27. Of the two broad areas of governance of the Executive Committee, namely policies and programmes, it was on the latter that the informal consultations focused, and more particularly on Special Programmes. A corollary to enjoying greater flexibility in the use of certain programme funds as proposed in some of the draft conclusions above is the sustained confidence of Member States. This confidence, in turn, can only be maintained if Member States feel that they are able to exercise real governance in a climate of transparency. The draft conclusions set out below seek to ensure greater transparency and the related governance over UNHCR's programmes.

2. Draft Conclusions: Governance

Conclusion 13: In addition to the broad review of General and Special Programmes at the time of the Executive Committee, intersessional meetings shall consider updates on programme needs and funding; at intersessional meetings, there shall also be a review of all country programmes (General and Special) in a particular region or regions (e.g. Asia/SWANAME; Europe/Americas; Africa), and of any Special Programmes covering a number of countries in the region(s).

Conclusion 14: The regular, systematic review of UNHCR programmes at the country level by the Executive Committee at inter-sessional meetings shall be based on agreed documentation (see below), and will include presentations by the senior staff of the Bureau concerned.

Conclusion 15: The uses made of the Emergency Fund, the Programme Reserve and the Voluntary Repatriation Fund shall be reviewed by the Executive Committee at its annual and intersessional meetings at the time of each of the programme reviews mentioned in Conclusion 14 above, to ensure that their use is in accord with the governing criteria.

Conclusion 16: The wording of the decision related to General and Special Programmes needs and resources adopted at the annual (or any other) session of the Executive Committee shall better reflect the enhanced governance exercised by the Executive Committee over these Programmes (see Annex 5 for a proposed text).

E. Oversight Reports

1. Introductory Note

28. The Executive Committee has available to it a number of reports emanating from a range of oversight bodies: the Board of External Auditors; reports of the ACABQ; the Inspection and Evaluation Service of UNHCR. It is proposed to make a more systematic study of these reports and UNHCR's follow-up to them.

2. Draft Conclusion: Oversight Reports

Conclusion 17: Within the broad framework of oversight of the work of UNHCR, the Executive Committee, in the course of its annual session and at intersessional meetings, shall consider, according to an agreed timetable, the various reports on audits, programmes, evaluations, and on the work of the UNHCR Inspection and Evaluation Service, as well as UNHCR's response to these reports.

F. Documentation

1. Introductory Note

29. A recurring theme during the Informal Consultations has been the need for clear and concise documentation that will facilitate governance. The following draft recommendations are aimed at assuring the necessary transparency to UNHCR's activities.

2. Draft Conclusions: Documentation

Conclusion 18: Programme documentation should be so presented that the focus is principally on countries/areas with a clear picture of programmes at the country level.

Conclusion 19: Programme documentation (covering both General and Special Programmes) for given countries/areas should be concise (not exceeding six pages) and be primarily focused on and offering justification for programmes in a planning year; the current and prior years activities shall be addressed only to explain any significant variations from estimates and planned activities. Special Programmes covering more than one country will also be presented separately, with corresponding consolidated tables showing estimates and expenditure.

Conclusion 20: The presentation of the annual accounts should be improved; in particular, the number of Special Programmes accounted for individually in the Annex to Statement 2 (which sets out income and expenditure for Special Programmes) shall be expanded to include the most important of those which are currently reported under "Other Trust Funds"; to the extent possible, "Other Trust Funds" should be identified by region.

G. Future Work

1. Introductory Note

30. The work of improving UNHCR's budget structures and the related documentation so as to enhance governance and accountability is an ongoing process. The following draft conclusion highlights some of the main issues still to be addressed.

2. Draft Conclusion

Conclusion 21: Among the steps to be taken to further enhance UNHCR's budgetary structure and related matters, study and informal consultations will be undertaken in relation to the following:

(i) the further adaptation and improvement of the budget structure as provided for in Conclusion 3 above;

(ii) the categories/sectors for reporting on UNHCR's activities, including the possibility of quantifying aspects of UNHCR's protection activities;

(iii) the presentation of budgets and reporting on programme activities, bearing in mind the need for conciseness and clarity, and the observations of the ACABQ in this regard;

(iv) review of UNHCR's current computer systems and databases and action to ensure that they are adapted to UNHCR's budgeting and reporting needs;

(v) ways to ensure better linkages between the presentation of UNHCR's budgets in the United Nations Biennium Budget in support of the Medium Term Plan and the current UNHCR annual budgets presented to the Executive Committee;

(vi) ways to ensure a better funding base for UNHCR activities;

(vii) review UNHCR's Financial Rules, including the provisions governing General and Special Programmes.

3. Comments

31. The Executive Committee will be kept regularly informed on progress on the above work plan and other related actions.

IV. CONCLUSION

32. The above proposals reflect the work in the informal consultations to date, and indicate what remains to be done. In particular, UNHCR is anxious to find consensus on the broad principles which should underlie any further work on budget structure and governance; this will help ensure that future endeavours will not only be focused, but produce further concrete results.

Annex 1 - ORIGIN OF INFORMAL CONSULTATIONS

A. Immediate Background

1. The report (A/AC.96/838) of the SCAF meeting on 29 September 1994 noted the continuing concern, on the part of some delegations, as to a range of issues related to budgetary questions. As the report indicated: " Concern was expressed by delegations about the relationship between the General Programme and Special Programmes. It was felt by some that the distinction between these two programmes no longer made sense; it was suggested that there might be a need for a single budget which would provide for all refugee/returnee needs. If merging the two budgets for General and Special Programmes was not the answer, then UNHCR should come up with another proposal. The thrust of these observations was supported by a number of delegations. Several delegations pointed out that any proposals on these issues must, however, safeguard flexibility through the right of the High Commissioner to address refugee situations through new appeals" (para.34). In addition, "the current degree of governance over Special Programmes was also raised by a number of delegations; at the moment, the Executive Committee only formally approved the General Programmes target which had become a minor part of the Office's total resources (para. 35)." These issues have become more urgent in recent years with the growth in the size of Special Programmes (see Annex 4).

2. It should also be noted that, in recent years, the ACABQ has also touched on some of these issues. It has asked that UNHCR ensure that Special Programmes do not contain any elements which should properly be incorporated into General Programmes (A/AC.96/816, para. 9). On the question of the governance that the Executive Committee exercises over Special Programmes, the ACABQ has asked that UNHCR should explore ways and means of ensuring greater oversight and control over activities and related expenditures for Special Programmes, given the volume of resources used under these programmes (A/AC.96/816, para.9; A/AC.96/834, para.15).

B. Temporary Working Group (1989-1990)

3. The question of the relationship between General and Special Programmes has taken on added importance over the last five years, mainly for the reasons alluded to above. The last substantive review of UNHCR's programmes, budgets and funding was undertaken by an Executive Committee Temporary Working Group set up in 1989. It presented its report (A/AC.96/742) to an extraordinary session of the Executive Committee from 28-30 May 1990. In spite of the exhaustive consideration given to UNHCR's programmes, budgetary and funding issues, as well as administrative and organizational matters, and the transparent and constructive atmosphere in which the review took place, one of the subjects which continued to preoccupy some delegations, for various and differing reasons, was the distinction between General and Special Programmes. Thus, the Report of Temporary Working Group asked in recommendation 39 n that UNHCR and the Executive Committee examine whether the distinction between General and Special Programmes remained valid.

4. In the "Report on Action taken by UNHCR on the Recommendations of the Temporary ExCom Working Group on Programme, Budgetary, Administrative and Organizational Matters" presented to the forty-first session of the Executive Committee (A/AC.96/781 of 15 October 1990), UNHCR, in its comments on recommendation 39n, gave a description of the two types of programmes. It did not examine the justification for the distinction. Rather, it showed how the contents of General Programmes had varied over the years. Thus its comments on recommendation 39 n concluded with the following observation: "While the appropriateness of the terminology "General Programmes/Special Programmes" might be questioned, the central issue is not whether there is the need to maintain these two categories of programmes, but to reflect on the scope of these categories."

5. The distinction between General and Special Programmes was one of the subjects listed for SCAF's possible consideration when it met on 11 December 1990 to agree on the list of outstanding issues from the work of the Temporary Working Group to be finalized in subsequent meetings of the Sub-Committee. However, it was not until the SCAF meeting on 19 May 1993, that the subject appeared on the agenda.

C. SCAF Meeting: 19 May 1993

6. At the SCAF meeting on 19 May 1993, the paper (EC/1993/SC.2/CRP.11) before the Sub-Committee again did not examine the justification for a budget structure reflecting two categories of programmes; rather it simply explained how the two categories of programmes derived from and reflected the distinction in UNHCR's Financial Rules between the General Fund and Trust Funds. While not the subject of elaboration in the paper, it might be noted that it was this very distinction that in 1977 prompted the then High Commissioner to propose the categories of "General Programmes" and "Special Programmes" (see Annex 3.)

7. Many of the view points expressed at the SCAF meeting of 19 May 1993 found echo in the current informal consultations. As the report of the meeting (EC/SC.2/63) noted: "many delegations voiced general satisfaction with the demarcation between General and Special Programmes and believed that the distinction should be maintained. Some stressed that the concerned parties should look at the issue pragmatically, rather than engage in a philosophical discussion. With the current mechanisms to ensure governance, donors were in a position to show a healthy interest in Special Programmes. One delegation believed that there were no compelling reasons for change. Several delegations believed that the two categories of programmes allowed for flexibility. Moreover, recent initiatives in relation to the Emergency Fund, the Programme Reserve and the establishment of a General Allocation for Voluntary Repatriation had also increased UNHCR's flexibility of response. Some delegations believed that basis offered for the two categories, namely the distinction in the Financial Rules between the General Funds and Trust Funds was insufficient. Moreover, one delegation pointed to what it considered as a serious imbalance between the two types of programmes.... One delegation pointed out that the fundamental issue was to explore ways as to how budgets as a whole could be looked at in a practical and more structured manner" (para.15).

8. Other issues related to the substance of the informal consultations have also been the subject of interventions in recent meetings of SCAF. A number of delegations have spoken of the need to maintain a balance between General and Special Programmes (Report of the 16 December 1993 Meeting of the Sub-Committee on Administrative and Financial Matters (EC/SC.2/65, para. 24). In addition, the disturbing trend of declining contributions to the General Programmes or what has become known as "structural under-funding of General Programmes" (EC/SC.2/65, para. 24), has been highlighted. Another recurring theme in the SCAF discussions has been the need to widen UNHCR's traditional funding base, including recourse to private sector funding (see. for example, the Report of the 17 May 1994 Meeting of the Sub-Committee on Administrative and Financial Matters (EC/SC.2/67, para. 25).

9. From the above brief review of the issues which have occasioned the current Informal Consultations, it is evident that the basic recurring concern relates to the two programme categories of UNHCR's budgetary structure .

Annex 2 - NOTE ON INFORMAL CONSULTATIONS

A. SCAF Meeting, 16 January 1995

1. The current consultations on UNHCR's budget structure were launched at the 16 January 1995 meeting of SCAF (EC/SC.2/72). The Sub-Committee had before it a paper (EC/1995/SC.2/CRP.5) which gave a preliminary presentation of the budgetary-related issues of concern to the Executive Committee.

2. On the occasion of this initial debate, delegations agreed that whatever the outcome of the consultative process, UNHCR's flexibility and ability to respond quickly and efficiently to emergencies had to be safeguarded and even enhanced. As regards budgetary structure, among the interventions supporting the status quo, it was also suggested that within Special Programmes, a further distinction might be made between those programmes that fall within UNHCR's mandate strictly understood and others. Among interventions expressing reservations about the status quo, one delegate called for a unified budgetary structure. It was suggested by another delegate that the current system of splitting a specific programme between General and Special Programmes inhibited donor funding: a clear, country-based budget would avoid this. More specifically on resource mobilization, one delegate raised the possibility of a limited system of assessed or negotiated contributions, possibly in combination with firmer multi-year pledges; this would be in parallel with the existing system of ad hoc contributions. On the question of governance, one delegate said that this could be considered from two points of view; firstly, the establishment of policy guidelines (e.g. on refugee women) and the monitoring of their implementation; and secondly, to ensure that the rules for the management of resources (and reporting thereon) are being applied consistently across both types of programmes.

B. Consultative Meeting: 23 March 1995

3. The first informal group consultation convened by the Chairman was held on 23 March 1995. This brief meeting had before it a paper on UNHCR's budget structure prepared by a consultant. The consultant listed six important criteria against which recommendations emanating from the consultative process should be measured. The recommendations should:

(a) be perceived to constitute an improvement;

(b) be helpful to the Executive Committee and Member States by assisting oversight and providing greater transparency;

(c) maintain the High Commissioner's flexibility of action;

(d) not inhibit the capacity of donors to respond to fund raising initiatives;

(e) be technically feasible; and

(f) provide for streamlined reporting.

4. The consultant presented five theoretical options (A-D) for a budget structure; four of these were varying configurations of the current budget structure, the fifth option being that of a unified budget. For each of the options, a list of advantages and disadvantages was presented. In the comments that follow, and given the earlier observations about the centrality of the question of the relevance of the distinction between General and Special Programmes, those comments of the consultant which may be relevant to this question will be particularly highlighted. Care will need to be taken, however, to ensure that such comments are interpreted in the context of the particular question being addressed.

5. A recurring theme in the consultant's consideration of the status quo or its possible variations (Options A-D) was that Special Programmes are "financially self-contained" (paras. 8,9,12,13) or "operate within self-contained financial envelopes" (para. 14) or are "subject to their own funding dynamics" (para. 14). This characteristic of Special Programmes, especially of large programmes, is seen as something positive, in that there is not the risk of such programmes drawing off resources from other programmes. On the other hand, Special Programmes could be victims of their own funding dynamics (para.14). Especially if the activities were such that they were eligible for inclusion under General Programmes, but, for a range of reasons were not included, they would not only be subject to the limitations associated with the earmarked nature of Special Programme financing, but would also lose the sense of priority and the managerial flexibility associated with General Programmes (par. 11).

6. This last comment underlines one of the advantages of General Programmes as they currently exist, namely the managerial flexibility which exists in regard to them (through the use of the Programme Reserve and the authority given to the High Commissioner to transfer appropriations among the various country/area programmes). As noted by the consultant, the General Programmes are normally administered as a whole, within the annual target and subject to the availability of funds (para. 7). In other words, General Programmes function as a unified budget, whereas Special Programmes are all individually self contained, each subject to its own funding dynamics. General Programmes also function as a form of prioritization. As the consultant noted, their funding and implementation effectively constitute the priority activity of UNHCR (para.6). However, as the consultant implies, effective prioritization only happens if an activity is included under a General Programmes target that is indeed funded; an overly large General Programme could be in danger of underfunding (para.13). In the absence of assured or predictable funding, it is ultimately funding dynamics which determine priorities, and allow activities which have been prioritized to be implemented.

7. As might be inferred from the preceding paragraph, one of the attractions of a unified, integrated budget would not only be its clarity of presentation, but, ideally, greater managerial flexibility. As in the case of General Programmes, however, such flexibility would only be possible if funds were available, and the larger the programme, the greater the uncertainty of the funding of the whole. A move to a unified budget, as the consultant points out, would require that considerable effort be placed in developing mechanisms which, in the climate of current uncertainty (both as to emergencies and resources to meet them), could assure flexibility (para.15). While recognizing that funding mechanisms are implicitly a form of prioritizing (and a unified budget would not preclude earmarking of funds), a unified budget would, nevertheless, require prioritization of activities (para.15).

8. The above observations on the consultant's paper have mainly focused on the question of the advantages/disadvantages of some form of the current budgetary structure (General/Special Programmes) and of a unified budget. It was not the intention of his paper to argue in favour of an option. A careful reading of the consultant's paper could, however, suggest a leaning to Option D. The consultant has described this option as follows:

This option is offered in order to soften the impact of Options B [Strictly apply the criteria governing the distinction] and C [Include voluntary repatriation under General Programmes], should these options, taken together, be seen to impose too heavy a burden on the General Programme. As a possible combination with Options B and C, and without prejudice to the principle of inclusion of some refugee assistance and repatriation programmes in the General Programme, Option D suggests that refugee and repatriation programmes of a certain magnitude might better remain self-contained as Special Programmes, and accordingly subject to their own funding dynamics. Thus, General Programmes would contain all refugee assistance and repatriation activities of UNHCR (including the Programme Reserve, the Emergency Fund and General Allocation for Voluntary Repatriation) except that any refugee or repatriation programme whose total cost in a given year is expected to exceed a certain percentage of the Annual Programme, calculated without reference to such programme(s), should be considered separately as a Special Programme. (The cut-off point would need to be determined, but could be in the range of 5 per cent, or about $ 20 million).

9. The discussion of the consultant's paper on 22 March 1995 was rather limited. A number of delegations had insufficient time to be briefed by their capitals. In interventions made, however, one delegation drew attention to the need for greater flexibility in regard to the activities which make up Special Programmes, in particular to avoid having funds tied up in programmes where there was little activity for the moment. In addition, the same delegation felt that Special Programmes should not be totally dependent on special funding, in particular those activities entitled to be included eventually under Special Programmes. Another delegation drew attention to the problem which would result if all current statutory activities were included under General Programmes; this would require a significant increase in the level of General Programmes. On the other hand, the delegate felt that it might be possible for a certain agreed portion of these activities to be moved into General Programmes; this would ensure that General Programmes were not overwhelmed by the transfer over of statutory activities currently being covered by Special Programmes.

C. Consultative Meeting: 8 May 1995

10. At a subsequent consultative meeting on 8 May 1995 convened by the Chairman, two further papers were considered: "Budget Structure: UNHCR's Preferred Option" and "Governance".

1. UNHCR's Preferred Option

11. UNHCR argued for an enhanced status quo, that is Option A of the consultant, but with a number of refinements that echo some of the elements of Options B, C, and D. As the paper noted, basic to the current budget structure (the status quo) was the distinction between General and Special Programmes. UNHCR felt that with the Office facing ever increasing demands and uncertain resources to respond to those demands, and the international community not currently disposed to adopt a radically new approach for assuring resources to UNHCR, then the current budget structure, despite its limitations, was still the most viable. UNHCR did not see many alternatives to choose from; the only concrete options were either a variation of the status quo or a unified budget. For a range of reasons, the status quo offered a more pragmatic and flexible way for the Office to discharge its mandate; and among the various options, Option A was felt to assure best a core of predictable funding for those activities (or at least the bulk thereof) that were, both, statutory and programmable. UNHCR noted that in opting for an enhanced status quo, it did not mean that the Office felt that there was no better way of structuring its budgets. In the immediate future, however, UNHCR had to meet the deadlines of its programming cycle. UNHCR was and would remain open to examining with the Executive Committee any concrete proposals whereby these structures may be improved, but would be concerned by the prospect of an open-ended and staff- time-intensive quest for a new structure for which the parameters that could command consensus were not yet evident.

12. In the discussion of this paper, while most delegations expressed broad satisfaction, in particular with the move towards enhancement, several delegations felt that the consideration of the options in the consultant's paper had not been adequate; one delegation felt that the paper setting out UNHCR's preferred option gave the impression of inflexibility. Another delegate felt that the consultations should look at the budget structures used by comparable organizations. Several delegations felt that there was need for a budget structure which was integrated and logical. More specifically, a number of interventions focused on the various recommendations proposed in the paper as regards the level of General Programmes, funding for voluntary repatriations, and the logic underlying the proposed increase to the Programme Reserve.

2. Governance

13. The other subject considered on 8 May 1995 was that of governance. As already indicated above, the principal concern in this area related to the oversight of the Executive Committee in regard to Special Programmes. Among other related issues raised, were the following:

(i) the use of funds, such as the Emergency Fund, the Programme Reserve and the General Allocation for Voluntary Repatriation, which were created to assure greater flexibility for the High Commissioner in responding to new developments, should continue to be reviewed at SCAF meetings; as these funds were established to meet certain specific goals and as their use are determined by established criteria, it would be more appropriate to consider such funds as "Criteria Funding"; the more usual way of referring to such funds hitherto, namely as "Contingency Funding Mechanisms" could give the wrong impression that these are discretionary funds; the role of the Executive Committee is to assure that the use of such funds is in accord with the established criteria;

(ii) the need for a closer review by the Executive Committee of audit reports, evaluations and reports of the Inspector, as well as of UNHCR's response to these;

(iii) the need for a more focused and systematic consideration of UNHCR programmes at the country level, inter alia, through regular dialogue with Directors of Regional Bureaux and Heads of Desks at SCAF meetings; to facilitate such a focused consideration, documentation would also need to be reviewed to ensure greater transparency at the country level.

14. On the question of governance over Special Programmes, one delegation made the distinction between two forms of control over these programmes: prior and subsequent. It was recognized that it was difficult, given the unpredictability and volatility of many programmes, to exercise credible prior control over them. Thus, in addition to assuring a close scrutiny as to the "how and why" of their formulation, the Executive Committee should look at how funds were used for such programmes. In this context, the delegate felt that the term "noting" might not be sufficient, to describe the Executive Committee's post factum review of operations. Another delegation spoke of his governments sustained efforts in recent years to make progress on this issue and to assure better governance over Special Programmes (and a form of words in Executive Committee decisions which would reflect this); some suggestions were made as to the text of possible decisions reflecting such governance. UNHCR recognized the grounds for concern and felt that an acceptable wording that reflected exercise of the necessary governance better than "noting" could be found.

D. Consultative Meeting: 7 June 1995

15. A consultative meeting was convened by the Chairman on 7 June 1995 for an initial review of a preliminary draft of this document. In addition to a brief introduction of the conclusions, UNHCR outlined the possible funding implications for General Programmes of implementation of the proposals and noted the importance of a concomitant commitment to increase General Programmes funding. Several delegations suggested that funding considerations would argue for some flexibility in determining the precise levels of the Programme Reserve and the Voluntary Repatriation Fund. In discussion, it was noted that implementation of the proposals would not result in an overall increase in demands on donors.

16. UNHCR informed delegations of the proposal to provide exceptionally for exchange rate losses, particularly at Headquarters, by increasing the Programme Reserve for 1996 from ten to twelve percent of programmed activities under the Annual Programme. The extra two percent would be used only for that purpose. One delegation suggested that the opportunity presented in these consultations should be taken to propose a standing, as opposed to exceptional, provision for exchange rate losses. Others supported this proposal.

17. It was agreed that the Secretariat would reflect, as appropriate, the suggestions and comments made by delegations in a revision (this text) of the document, on which the views of capitals would be sought in advance of the 20 June 1995 SCAF meeting.

Annex 3 - HISTORICAL NOTE: GENERAL AND SPECIAL PROGRAMMES

1. In 1974, the growth of special humanitarian operations (to be later included under Special Programmes) undertaken by the High Commissioner, in addition to the traditional activities under the Statute of the Office, led the Executive Committee at its twenty-fifth session to focus on the issue of reporting procedures for such operations. These operations were activities undertaken either in the context of the High Commissioner's "Good Offices" functions, as recognized and promoted by the General Assembly, or at the request of the Secretary-General. The "Report on UNHCR Assistance Activities in 1973-1974 and proposed Voluntary Funds Programme and Budget for 1975" ( A/AC.96/506; A/AC.96/506/ Add.1; A/AC.96/506/ Add.1/Corr.1) referred briefly to four such special operations. The one that focused on Southern Sudan may serve to illustrate the nature of such special operations. The High Commissioner had been entrusted with the co-ordination of the United Nations Immediate Relief Programme for the Southern Region of the Sudan by the Secretary General. The programme was intended to help the Sudanese government with the return from the bush of some 500,000 persons displaced internally, and with the orderly repatriation of approximately 180,000 refugees. The arrangements made by the Secretary-General were endorsed by ECOSOC (Resolution 1655 (LII)) and the General Assembly (Resolution 2958 (XXVII)); the actions of the High Commissioner were also the subject of reports to ECOSOC and the General Assembly (for example, ECOSOC Resolution 1705 (LIII); General Assembly Resolution 2958 (XXVII)).

2. The consideration of the reporting arrangements for such special operations by the Executive Committee was being undertaken against the background of the introduction of programme budgeting within the United Nations (1974) and the move in 1973 to a comprehensive annual UNHCR Programme and Budget based on country programmes, as recommended by the United Nations Administrative Management Service.

3. In the document entitled " UNHCR Activities in the Field of Assistance in 1972, 1973 and 1974 (A/AC.96/487 of 27 August 1973) there can be seen the first attempts at country programming. As described in the introduction: "The system implies defining specific objectives of UNHCR's action in each country, and drawing up country or area plans covering the full period required for the solution of the refugee situations in the countries concerned. Each plan would define the means, quantify the resources required and set a target date for the attainment of the objectives of the plan. Within the framework and in the perspective of these plans, specific one-year programmes will be elaborated for submission to the Executive Committee within the annual UNHCR programme" (para.3). A caveat, however, was voiced: "In view of the special nature of refugee assistance as compared, for instance, to technical assistance or development investment, precise forward planning by UNHCR has definite limitations" (para.4). Under the Annual Assistance Programme, as well as individual country programmes which are found in document A/AC.96/487, the sources of funds were indicated as follows: UNHCR Regular Programme; Emergency Fund; and Trust Funds. There was no reporting, however, even under Trust Funds, on special humanitarian operations; for example, although the introduction to document A/AC.96/487 has a brief narrative description of current special humanitarian operations, including the United Nations Immediate Relief Programme for the Southern Region of Sudan, the country chapter dealing with Sudan makes only a fleeting reference to this special operation in its introductory note, with no reference to the special operation in either tables or narrative for 1972 or 1973.

4. Thus, in 1974 the Executive Committee was confronted with a situation not totally dissimilar to the one occasioning the attention of Member States today. As noted by the then Deputy High Commissioner in his opening statement to the Third Special Session on 28 May 1973: "the net expenditure covered from the regular budget of the United Nations amounted to approximately $ 4 million, while extra-budgetary expenditure reached $ 11.7 million, and this is not counting the special operation in Southern Sudan, which involved over $ 12 million."

5. The review of reporting arrangements for special operations coincided with the introduction of programme budgeting. The first Medium Term Plan of the United Nations was to cover the period 1974-1977; however, UNHCR had been requested to prepare only a biennial work programme (1974-1975), and the corresponding budget. With the introduction of programme budgeting, and given the nature of the operations of UNHCR, in particular their unpredictability, special arrangements were agreed to by the General Assembly for UNHCR; these arrangements have endured down to the present time (Official Records of the General Assembly, Twenty-eighth Session, Supplement No. 8 (A/9008)).

6. In accord with these arrangements, the Report "UNHCR Assistance Activities in 1973-1974 and proposed Voluntary Funds Programme and Budget for 1975" (A/AC.96/506; A/AC.96/506/Add.1; A/AC.96/506/Add.1/Corr.1) was presented to the twenty-fifth session of the Executive Committee (1974). Table I of this Report, entitled "UNHCR activities in the field of assistance in 1973, 1974 and 1975", presented only two broad sources of funds: the first was the Annual Programme; the second source of funds was indicated as Trust Funds and Emergency Fund. The ACABQ was of the opinion that the general plan of the report was sound (A/AC.96/509. para.3).

7. In the General Debate at the twenty-fifth session of the Executive Committee (1974), the subject special operations was touched on by several representatives. "Considering the scope of the special tasks entrusted to the High Commissioner and the large sums involved in financing them, the question arose as to whether the role of the Executive Committee in this connection should not be reviewed so that it would be in a better position to give advice on the administrative and financial aspects of these tasks. Some representatives wondered whether it might not be useful in this connection to give further thought to the terms of reference of the Executive Committee (A/AC.96/511, para. 32.). In responding to these observations, the High Commissioner "suggested that UNHCR activities outside the regular programme might be placed in an appropriate institutional framework and proposed that this important question should be further studied. He also suggested that in order for his Office to get the benefit of the Committee's advice on the special tasks entrusted to him, he might report on them to the Committee in the same manner as his Office was now reporting on other activities financed from Trust Funds and administered in the framework of his Regular Programme" (A/AC.96/511, para. 33.). The Executive Committee consequently:

"Invited the High Commissioner within the framework of programme budgeting to report to the Executive Committee on his special tasks in the same manner as he reported on other activities financed from trust funds under his regular programme" (A/AC.96/511, para.38 (d)).

This decision was endorsed by General Assembly Resolution 3271 (XXIX) of 10 December 1974.

8. In this way, the High Commissioner and the Executive Committee not only addressed the issues raised in regard to reporting on "special tasks" but also effectively set the foundations for the current budgetary distinction between General and Special Programmes.

9. The "Report on UNHCR Assistance Activities in 1974-1975 and proposed Voluntary Funds Programme and Budget for 1976" (A/AC.96/516) presented to the twenty-sixth session of the Executive Committee (1975) covered the activities of the Office in much the same way as the report presented in 1974. A report on special operations was given as an addendum to document A/AC.96/516.

10. In 1976, the document presented to the Executive Committee on assistance activities ("Report on UNHCR Assistance Activities in 1975-1976 and proposed Voluntary Funds Programme and Budget for 1977" (A/AC.96/526)) reflected a significant effort to ensure a comprehensive picture of UNHCR's activities, both overall and at the country/area level. The programme narrative was accompanied by additional and expanded tables. However, special operations were still not included in the main table indicating "Total UNHCR Expenditure" (Table I). In this Table, the two main sources of funds indicated were the Regular Budget and Voluntary Funds. The latter was divided into the Annual Programme and Trust Funds, with this latter category being defined as including the Emergency Fund, the Long-Playing Records Scheme and Trust Funds other than those for special operations. At the country level, the table accompanying each country chapter presented the sources of funds as follows: Annual Programme (1); Emergency Fund (2); Trust Funds (3); Regular Budget (4) and Special Operation. From the layout of the table, it is obvious that funds (1)-(4) were considered as constituting a separate category, alongside the category of "Special Operation"; no term is used to describe either of these categories. These improvements were received positively by the ACABQ (A/AC.96/531).

11. In the introductory comments to document (A/AC.96/526) describing the efforts of the Secretariat to streamline documentation, the following comment is made: " While this streamling of documentation is more a question of form than of substance, it is nonetheless in keeping with the evolution of the Office as reflected in the pertinent resolutions of the Economic and Social Council and the General Assembly " (para (iv)).

12. In 1977, the Executive Committee at its twenty-eighth session was presented with a report entitled: "Note on the Presentation of the Report on UNHCR Assistance Activities" (A/AC.96/540). This note traced the background to the presentation of UNHCR Assistance Programmes in recent years, leading up to the format adopted in the document on assistance activities before the Executive Committee ("Report on UNHCR Assistance Activities in 1976-1977 and proposed Voluntary Funds Programme and Budget for 1978" (A/AC.96/539).

13. As of 1977, Assistance Programmes were presented under two categories, General Programmes and Special Programmes. "General Programmes" comprised activities hitherto covered by the Annual Programme and the Emergency Fund; "Special Programmes" were described as comprising special operations and all other trust funds including the Education Account. In addition to the introduction of the two terms "General Programmes and "Special Programmes" to describe two different groupings of programmes, it is also interesting to note the realignment of the various elements. Now all trust funds are grouped together. Previously (see para 11 above) the Emergency Fund had been grouped with Trust Funds which, in turn, excluded those trust funds governing special operations. The point of reference chosen for aligning activities in one category or the other was simply that of placing all trust funds (and this would exclude the Emergency Fund by definition) under the new category of Special Programmes. The inclusion of special operations (Special Programmes) in the category of all other trust funds was thought to be in line with the thinking of the Executive Committee as implied in its decision regarding reporting on special operations, endorsed by the General Assembly Resolution 3271 (XXIX) of 10 December 1974. As the Note (A/AC./96/540) stated: "In an effort to arrive at precise criteria to be used for considering a given activity as either a General or a Special programme, the High Commissioner has applied, for the purpose of classifying his activities into the aforementioned categories, the broad considerations which distinguish trust funds from general funds." (para.9).

14. This historical background underlines the rather pragmatic nature of the distinction between General and Special Programmes. This budget structure sought to impose form and order on the existing realities: the budgetary elements, operating according to their own dynamics (and in accord with the Financial Rules, in particular those governing the General Fund and those covering Trust Funds), were already in place. The form given to them, nevertheless, had a certain logic and ensured certain practical results. It could be argued that it is these practical outcomes that need to be safeguarded, no matter what budgetary structure is adopted.

Annex 4 - CRITERIA AND EVOLUTION OF THE VARIOUS FUNDING MECHANISMS

I. CURRENT CRITERIA

1. The current criteria for the Emergency Fund, General Programmes Reserve and the General Allocation for Voluntary Repatriation are set out below. In addition, the purposes of the Working Capital and Guarantee Fund are also included, for ease of reference.

A. Emergency Fund

2. The purposes of the Emergency Fund, as currently established, and as set out in articles 6.4-6.7 of UNHCR's Financial Rules (A/AC.96/503/Rev.5), are as follows:

6.4 The Emergency Fund is established to provide:

(a) financial assistance to refugees and displaced persons in emergency situations for which there is no provision in the programmes approved by the Executive Committee;

(b) such additional administrative expenditure resulting from those emergencies as cannot be met from the regular budget, pending action by the Executive Committee or the General Assembly.

6.5 The High Commissioner may allocate from the Emergency Fund up to $ 25,000,000 annually, provided that the amount made available for one single emergency shall not exceed $ 8,000,000 in any one year.

6.6 The Emergency Fund shall be maintained at not less than $ 8,000,000 by replenishments from the Working Capital and Guarantee Fund and by voluntary contributions.

6.7 The High Commissioner shall report to the Executive Committee at each session on the use made of the Emergency Fund.

B. Programme Reserve

3. The rules governing the use of the Programme Reserve are not found in UNHCR's Financial Rules, but are set out each year in the Overview document, most recently in document A/AC.96/824.

The Programme Reserve is used for the following purposes:

(a) to cover unexpected increases in the costs of projects financed from the current or previous years' programmes, or from an Emergency Fund allocation made in a previous year;

(b) to meet the cost of modifications to current year projects that may be necessary to achieve the approved project objectives;

(c) to increase existing allocations to meet needs resulting from a new influx of refugees belonging to a group already receiving assistance under the current year programme; and

(d) to increase, as required, with the Executive Committee's approval, the Field Staff Housing and Basic Amenities Fund.

C. General Allocation for Voluntary Repatriation

4. The general objectives of such an Allocation were first broached in a document entitled: "Voluntary Repatriation: Resource Mobilization for Voluntary Repatriation Movements and Reintegration Assistance" (EC/SC.2/1991/CRP.18). The paper noted that: "UNHCR's responsiveness in the face of opportunities for voluntary repatriation would be considerably enhanced if it had recourse to an assured source of funding to meet short-term reintegration/rehabilitation costs. ... The availability of resources to meet such needs would enable the High Commissioner to engage in more concrete forward planning, especially in regard to the necessary measures to be taken on behalf of returnees in their country of origin, thus making repatriation a more viable proposition" (para. 17). The paper went on to note, however, that: "In addition, UNHCR proposes that there be included in future General Programme targets, more substantial provisions to promote voluntary repatriation and to meet costs of transportation/movements, as well as any basic needs to be provided on departure. In this way also, the preferred durable solution of voluntary repatriation would figure more prominently among UNHCR's funding priorities as reflected in General Programmes" (para. 18).

5. The subject of resources for voluntary repatriation was expressly addressed in another paper: "Voluntary Repatriation: Possible Resource Provisions Under General Programmes" (EC/SC.2/1991/CRP.24/Rev.1).

D. Working Capital and Guarantee Fund

6. The uses of the Working Capital and Guarantee Fund are set out in article 6.3 of the Financial Rules (A/AC.96/503/Rev.5):

6.3 The Working Capital and Guarantee Fund may be utilized for the following purposes:

(a) to replenish the Emergency Fund;

(b) to meet essential payments due for the implementation of projects pending receipt of contributions pledged;

(c) to guarantee obligations incurred against unconditional and conditional governmental pledges or firm pledges from organizations of established repute;

(d) to guarantee commitments in respect of revenue-producing activities of UNHCR;

(e) to fund in the course of a given year, obligations incurred under the Annual Programme and the Emergency Fund pending the receipt of anticipated contributions, on the condition that the level of obligations so funded does not exceed one twelfth of that year's country and area programmes and overall allocations for the Annual Programme and Emergency Fund approved by the Executive Committee (see article 7.3). However, this funding facility shall only be used to the extent that at the end of a given year, obligations thus funded do not exceed 3 % of that year's country and area programmes and overall allocations for the Annual Programme and Emergency Fund approved by the Executive Committee, and that the Working Capital and Guarantee Fund shall be replenished as a matter of priority in the subsequent year according to the provisions of Article 6.2 above, and where appropriate and necessary, from contributions to the Annual Programme;

(f) for any other purpose that the Executive Committee may authorize.

II. LEVEL OF FUNDS.

7. In the course of the Informal Consultations, it was suggested that level of the Emergency Fund, the General Programmes Reserve and the General Allocation for Voluntary Repatriation had not kept pace with the overall growth in UNHCR activities. Two Tables (4.1 and 4.2) attached to this Annex show the levels of UNHCR expenditure in the past twenty years (Table 4.1) and the level of funding by the Emergency Fund, the General Programmes Reserve and the General Allocation for Voluntary Repatriation as a percentage of total expenditure for a number of randomly chosen years (Table 4.2). To assist in the interpretation of Table 4.2, it is important to be aware of the evolution (and reasons for the same) of each of the funds/reserves. The evolution of each of the Funds/Reserve is set out below.

A. Working Capital and Guarantee Fund

8. The Working Capital and Guarantee Fund has not been considered in Table 4.1. This Fund serves primarily a guarantee function, whereas the other funds/reserves are more operational in nature. Nevertheless, the evolution of this Fund is not without interest, in particular the observations of the ACABQ at the time of the proposed increases in 1990. The Working Capital and Guarantee Fund, originally called the "Funds Set Aside" until its change in name in October 1972 (A/AC.96/484, para.119 refers), has not evolved in a regular manner down the years. Established in 1968, its ceiling was established at $ 1.5 million (A/AC.96/403, para. 151 (l)). Its purposes were first reflected in the Financial Rules of 31 July 1974 (A/AC.96/503). When in 1979 it was proposed that the ceiling be raised to $10 million, the reason given was the following: "during the last decade there has been a steady increase in the volume of UNHCR's assistance programmes" (A/AC.96/566). The proposal was accepted (A/AC.96/572). The next review of the Working Capital and Guarantee Fund was not until 1990 when the ceiling was raised to $50 million. In supporting this increase, the ACABQ noted that the ceiling of $50 million represented about one month of UNHCR's total expenditures; it felt that a more realistic level for the Fund would be at about two months of total expenditures; it also was of the opinion that the Fund's purpose, financing and ceiling should be reviewed regularly, perhaps every two years (EC/SC.2/1990/CRP.4, attached document 2). The proposed increase to $50 million was approved by SCAF at its meeting on 11 and 17 December 1990 (EC/SC.2/1991/CRP.1, para.18).

B. The Emergency Fund

9. From its creation in 1957, the Emergency Fund remained under the authority of the General Assembly until 1990; in that year, control over the Fund was given to the Executive Committee of UNHCR (Resolution 45/140 B). The initial ceiling of the Emergency Fund was established at $ 500,000.

10. In 1971, the Executive Committee took note of the intention of the High Commissioner to revise the Financial Rules (A/AC.96/459, paras 5-11) with a view inter alia of clarifying the purposes and utilization of the "Funds set Aside" (currently the Working Capital and Guarantee Fund), and their relationship to the Emergency Fund. It recommended that the ceiling of the Emergency Fund be raised to $ 1 million, with the maximum to be made available for any one emergency in any one year to be $ 500,000. In 1972 the General Assembly approved these changes to the Emergency Fund (Resolution 2956 B (XXVII)).

11. In 1974, a further increase to the Emergency Fund was considered (A/AC.96/506, paras (xxviii)-(xli)). The General Assembly subsequently increased the ceiling of the Fund to $ 2 million, with $ 500,000 available for any single emergency in a given year (Resolution 3271 B (XXIX).

12. In 1978, the Executive Committee, with a view to maximizing the use of the Emergency Fund in any given year, approved the proposal whereby an Emergency Fund allocation could be cancelled if sufficient contributions to a given appeal were later received (A/AC.96/553, para.(xxxix)).

13. In 1980, the General Assembly approved (35/41B) an increase in the ceiling of the Emergency Fund to $10 million, with the amount made available to a single emergency limited to $ 4 million in any one year; the Fund was to be maintained at not less than $ 4 million. One reason for these changes was that "the complexity of the emergencies which the High Commissioner faces is increasing and that the cost of all forms of emergency relief is steadily rising" (A/AC.96/577, paras. (lii)-(liii)).

14. At a special session of the Executive Committee on 6 February 1991, it was decided, with a view to giving the High Commissioner a greater degree of flexibility to respond to emergencies, to raise the ceiling of the Emergency Fund to $ 20 million, with permission to spend up to $6 million for any one emergency (A/AC.96/768, para.11).

15. On 17 December 1992, the Executive Committee, "noting the increasing demands on the Office to respond to a range of humanitarian emergencies" raised the ceiling of the Emergency Fund to $ 25 million, with the amount available for any single emergency in any one year raised to $ 8 million (A/AC.96/806, para.8).

C. The Programme Reserve

16. The terms of reference and level of the Programme Reserve have varied considerably over the years. In the programme allocation for 1961, for example, the Reserve was proposed at six per cent of the target for material assistance (A/AC.96/71/Rev.1). In 1964 (A/AC.96/263/Rev.1), it was proposed that for 1965 the Reserve be set at roughly 3.5% of the total expected sum of the Programme. In 1967, the Reserve stood at 5 per cent of the total target. At the time when the decision was made in October 1967 that the Executive Committee would meet once annually, rather than twice annually, the Programme Reserve was raised to approximately 7.5 per cent of the total target (A/AC/96/386, para. 38 (d)); it was also resolved that the level of the Reserve would be kept under review in the light of experience.

17. In 1970, at its twenty-first session, the level of the Programme Reserve was reviewed. This time, in widening its criteria to cover increases in costs in prior year projects, including those originally financed out of the Emergency Fund, the reserve was raised "to approximately 9 per cent of the total financial target" (A/AC.96/447, para.136; see also A/AC.96/429, paras 257-260).

18. In 1975, the Programme Reserve was again examined by the Executive Committee at its twenty-sixth session. It was agreed that the Reserve "should continue to represent approximately 10 per cent of the net target figure" (A/AC.96/521, para. 120 (b)).

19. The next review of the Programme Reserve was in 1976 at the twenty-seventh session of the Executive Committee, when in an attempt to avoid mid-year revisions to the programme, it was proposed to increase the Reserve from 10 to 20 per cent of the overall target (A/AC.96/534, para 126). This question was taken up again at the twenty-eighth session, on the basis of a "Note on the financing of UNHCR's General Programmes" (A/AC.96/541). The Note recalled the proposal to increase the Programme Reserve and the reason for the proposal; it suggested as an alternative, revised criteria for the use of the Emergency Fund. The Executive Committee felt that neither proposal would solve the problem of mid-year appeals. "They agreed, therefore, that in view of the present difficult financial situation, detailed consideration of the proposals be deferred to a future session of the Committee." (A/AC.96/549, para. 103). (Note: In 1977, the ceiling of the Emergency Fund stood at $ 2 million).

20. The Programme Reserve has remained at 10 per cent of programmed activities under the Annual Programme (excluding the General Allocation for Voluntary Repatriation), although for a number of years (1988 -1991), because of UNHCR's financial situation, it was reduced.

D. The General Allocation for Voluntary Repatriation

21. The General Allocation for Voluntary Repatriation was only established in December 1991; the Allocation currently stands at $20 million. Its purposes are described in EC/SC.2/1991/CRP.24/Rev.1.

III. PROPOSED CHANGES TO EXISTING CRITERIA¹

A. Programme Reserve (suggested amended text) (changes underlined)

The Programme Reserve may be used for the following purposes:

(a) to cover unexpected increases in the costs of projects financed from the current or previous years' Annual Programmes, or from an Emergency Fund allocation made in a current or previous year;

(b) to meet the cost of modifications to current year projects under the Annual Programme that may be necessary to achieve the approved project objectives;

(c) to increase existing allocations to meet needs resulting from a new influx of refugees belonging to a group already receiving assistance under the current year Annual Programme;

(d) to complement Special Programme funding for refugee situations, provided that the total of all such allocations does not exceed one third of the Programme Reserve in a given year; and

(e) to increase, as required, with the Executive Committee's approval, the Field Staff Housing and Basic Amenities Fund.

B. Voluntary Repatriation Fund (suggested new text)

The Voluntary Repatriation Fund may be used for the following purposes:

(a) to fund planning of repatriation, especially in regard to the necessary measures to be taken on behalf of returnees in their country of origin;

(b) to fund preparations in the country of asylum for voluntary repatriations not otherwise provided for, and activities related to actual return;

(c) to provide supplementary funding for voluntary repatriations, including those which continue to have the remainder of their needs programmed under Special Programmes, provided that in a given year, the allocation to any one voluntary repatriation programme does not exceed $ 10.0 million.

C. Working Capital and Guarantee Fund (proposed additional provision)

New provision (f) (old (f) becomes (h)):

The Working Capital and Guarantee Fund may be utilized to guarantee budgetary increases to the General Programmes target, not exceeding 2 per cent of an approved target, that may result from increased costs directly due to exchange rate fluctuations. If such a use had to be made of the Working Capital and Guarantee Fund, it shall be replenished in the subsequent year in accordance with the provisions of Article 6.2 of the Financial Rules.

Annex 5 - DECISION ON ADMINISTRATIVE AND FINANCIAL MATTERS

ELEMENTS RELATING TO GENERAL AND SPECIAL PROGRAMMES

Confirms that the activities proposed under General and Special Programmes as set out in document A/AC.96/ have been found, on review, to be consistent with the Statute of the Office of the High Commissioner (General Assembly Resolution 428 (V)), the High Commissioner's "Good Offices" functions as recognized, promoted or requested by the General Assembly, the Security Council, or the Secretary-General, and the relevant provisions of the Financial Rules for Voluntary Funds Administered by the High Commissioner for Refugees (A/AC.96/503/Rev.5);

Requests the High Commissioner, within the resources available, to respond flexibly and efficiently to the needs currently indicated under General and Special Programmes which are tentatively estimated at $, and to any other new needs that might arise, bearing in mind the Statute of the Office and the priority to be accorded to statutory activities, and the relevant provisions of the Financial Rules for Voluntary Funds;

Approves the country/area programmes, and the Headquarters and Other Programmes for the 1996 General Programmes amounting to $, (including $ 25,000,000 for the Emergency Fund, $ 20,000,000 for the Voluntary Repatriation Fund, and a Programme Reserve of $ ) as detailed in document A/AC.96/ (Table VIII), and authorizes the High Commissioner within this approved level, to effect adjustments in projects, country/area programmes, and the Headquarters and Other Programmes, as may be required by changes affecting the refugee/returnee programmes for which they were planned;

Approves likewise the country/area programmes, and the Headquarters and Other Programmes for the revised 1995 General Programmes amounting to $, (including $ 25,000,000 for the Emergency Fund, $ 20,000,000 for the Voluntary Repatriation Fund, and a Programme Reserve of $ ) as detailed in document A/AC.96/ (Table VIII);

Requests the High Commissioner to keep the Executive Committee regularly informed on developments under both General and Special Programmes, including the uses made, in accord with their established criteria, of the Emergency Fund, the Voluntary Repatriation Fund, and the Programme Reserve;

Notes the Report of the Board of Auditors on the Voluntary Funds administered by the United Nations High Commissioner for Refugees: Accounts for the Year 1994 (A/AC.96/ ), the Reports of the ACABQ (A/AC.96/ ), the Note on UNHCR Evaluation Activities ( ), and the Report of the High Commissioner on the work of the Director of Inspection and Evaluation Services (A/AC.96/ ), and requests to be kept regularly informed on the follow-up to the observations raised in these various oversight documents;

Urges Member States, in the light of the extensive needs to be addressed by the Office of the High Commissioner, to respond generously and in a spirit of solidarity, and in a timely manner, to her appeals for resources:

Note

For purposes of comparison, the relevant parts of the Decision on Programme, Administrative and Financial Matters adopted in 1994 (A/AC.96/839, para. 24) are set out below:

"(a) Notes that the current proposed estimates for 1995, based on needs known at this stage, under both General and Special programmes, amount to some $ ..... billion;

(b) Approves the country and area programmes and the Headquarters and Other Programmes for the revised 1994 General Programmes which remain at $ ....... (including $ ........ million for the Emergency Fund and $ ..... million for the General Allocation for Voluntary Repatriation) as contained in document A/AC.96/825 (Parts I-VI), and as shown in the document (column 5) at Annex 1 to document A/AC.96/824;

(c) Approves the country and area programmes, and the Headquarters and Other Programmes for the revised 1995 General Programmes amounting to $ ....... (including $ ........ million for the Emergency Fund and $ ..... million for the General Allocation for Voluntary Repatriation) as contained in document A/AC.96/825 (Parts I-VI), and as shown in the document (column 8) at Annex 1 to document A/AC.96/824;

(d) Calls on UNHCR to present to an early session in 1995 of the Sub-Committee on Administrative and Financial Matters an update on 1995 programme needs which takes into account especially developments in refugee situations and additional initiatives which need to be taken to give effect to programmatic priorities adopted by the Executive Committee;

(e) Authorizes the High Commissioner to effect such adjustments in projects, country or area programmes and overall allocations as may be required by changes affecting the refugee or returnee programmes for which they were planned, using the General Programmes Reserve where necessary, and to report such adjustments to the Executive Committee at its forty-sixth session;"

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1 The term "statutory activities" is used to describe activities relating to the protection and assistance of refugees and the pursuit of durable solutions (voluntary repatriation; local integration; resettlement). As regards activities related to voluntary repatriation, those considered as statutory activities and, therefore, eligible for General Programme funding are all those in the country of asylum and related to actual return, but are limited in scope and duration after return (see the matrix attached to document EC/SC.2/1991/CRP.24/Rev.1). Some commentators describe these activities as the "mandated" or "mandatory" functions of UNHCR. The distinction is between activities on behalf of refugees under the Statute or Mandate of the Office (General Assembly Resolution 428 (V)) and activities undertaken in the context of the High Commissioner's "Good Offices" functions. All these types of activities could be regarded as mandated in the broader sense of the term. The distinction is not one of legitimacy, but of nature.

1 Presented for information only; in light of the conclusions adopted as a result of the current informal consultations, a formal proposal will be made to the Executive Committee to revise the Financial Rules