Executive Board Second Regular Session, September 2003

Mr. President, Distinguished Delegates:

It is with pleasure that I address you again at this session to introduce UNFPA's budget proposal for the next two years and the Annual Financial Review for last year.

Before addressing the budget proposal, let me start first with some highlights of the Annual Financial Review for 2002.

Total income to UNFPA in 2002 was $373.1 million, down over $23 million, from $396.4 million in 2001. It comprised regular resources of $260.1 million and other resources of $113 million. The decrease in regular resources of $8.5 million would have been greater if donor governments had not increased contributions following the loss of the United States’ contribution, and if the exchange rate vis-a-vis the US dollar was favourable. In this regard, I wish to thank you for your tremendous support and I thank all the programme countries that also contributed as a demonstration of commitment and a reaffirmation of support to UNFPA.

I am pleased to report that, despite a drop in income from the previous year, total programme expenditure in 2002 increased to $343.3 million, nearly $26 million more than was spent in 2001. In addition, programme activities funded by regular resources totaled $203.6 million – an increase of 19 per cent compared with 2001. Out of the $203.6 million, $116.5 million was spent in countries with the greatest need.

I am also pleased to report that UNFPA’s financial position at the beginning of 2003 was healthy, and it has improved even further during the course of the year. Again thanks to many of our donor countries.

Mr. President, Distinguished Delegates:

I will now focus on the Biennial Support Budget for 2004-2005.

In my statement I will address policy issues, highlight some of the key financial elements contained in the budget and respond to the concerns raised by the ACABQ in its report.

At the end of my statement, Mr. Subhash Gupta, Director of the Division for Management Services, will provide more details in a PowerPoint presentation, after which Ms. Imelda Henkin, Deputy Executive Director (Management), Mr. Gupta and myself will respond to any questions you may have.

UNFPA Transition

Mr. President,

This budget proposal could not have come at a more opportune time. In many ways, it is the embodiment of the transition process that has figured so prominently in our work, and in the statements I have made to this Board since I became Executive Director nearly three years ago. Indeed, the budget is designed to pave the way for implementing the outcomes of the transition process and, in so doing, to improve the organization's performance and help it realize its goals in the short term as well as in the long term.

 As part of the changes that we have been able to institutionalize, we see the Multi-Year Funding Framework (MYFF) as our strategic document and thus we are working to align the framework for the proposed budget for 2004 – 2005 and the Intercountry Programme with it. We hope that the next budget will be presented with the Multi-year Funding Framework in the same Executive Board session and thus reflect more clearly how the resources are proposed to achieve the goals of the MYFF.

 

As I said earlier, the proposed Biennial Support Budget for 2004-2005 is consistent with the 2004-2007 Multi-year Funding Framework that is currently being developed and it builds on the lessons learned in the implementation of the current MYFF, and the new strategic direction of UNFPA, in consultation with the Board and other partners. The breakdown of biennial support budget resources among different appropriation lines has been designed to ensure that adequate support is provided to the MYFF’s goals, outcomes, strategies and to enable the Fund to manage better for results.

 

The main outcomes of the transition are summarized in paragraph 10 of the budget document. These are so vital for understanding the budget proposal before you that I believe they are worth repeating here. These include: 

1. A new strategic direction to help programme countries achieve the goals of the ICPD Programme of Action, the five-year review of the ICPD, and the Millennium Development Goals (MDGs). It will do that through linking the programme support to national policy development and poverty reduction, based on an overarching conceptual framework that links gender, reproductive health and rights and population to poverty reduction. To achieve this end, the Fund will build its staff’s technical knowledge and capacity to engage in broader policy, planning, programming and costing processes;
    
2. A realigned organizational structure, with a country office typology, which would strengthen the Fund’s performance at the country level;
3. A new image for increased visibility;
    
4. Improved programme management capacity in country offices through the establishment of new operations manager posts;
5. A new human resources strategy and a learning and training strategy to support the implementation of the transition; this includes developing new staff competencies and strengthening the substantive, technical and managerial abilities of the staff to increase their effectiveness in advocacy, policy and programming functions;
6. The building of a culture of knowledge sharing in UNFPA reflected in one of the MYFF’s key strategies for the Fund as an organization that builds and uses knowledge for effective programming.

 

Mr. President, these outcomes are interdependent. They are intended to both draw upon and reinforce one another. Each outcome is extremely important in and of itself, of course, but it is the combined effect of the outcomes that will determine if, and to what extent, the transition succeeds in achieving its objectives.

The collective objective is to strengthen the capacity of UNFPA, and in particular the capacity of its country offices, and the countries themselves, to advance the ICPD agenda and to link that agenda to the attainment of the Millennium Development Goals.

The Fund's new strategic direction is at the heart of this process. It is driven by the need to position the ICPD and the ICPD+5 key actions firmly within the context of the MDGs. This requires that UNFPA widen and strengthen its network of partners, both inside and outside the United Nations system. It also requires that UNFPA expand its participation in strategic partnerships at the country level, through national strategic frameworks such as PRSPs and sector-wide approaches, as well as joint programming. Here, I take this opportunity to express my sincere appreciation to the Government of the Netherlands for seconding an Adviser to UNFPA on sector-wide approaches, health sector reform and PRSPs.

Expanding our participation in strategic partnerships at the country level requires having the ability to convince partners that population and reproductive health concerns are central, critical and indispensable to achieving the Millennium Development Goals, and must be an integral part of any national strategic framework. It also requires having the right people in the right place, and the systems to support them to get results.

In this regard, UNFPA is in a somewhat unique position: It must be firmly "upstream" to influence the national policy dialogue and generate support for providing reproductive health services. And it must be "downstream" to provide the technical assistance and work with partners who deliver the services needed to meet the resulting demand and build national capacity, all within rights-based approach.

Outline of the Biennium Support Budget Proposal

In order to accomplish its work, UNFPA is proposing a gross increase in its biennial support budget of $14.4 million, or 9.3 per cent, from $155.2 million to $169.6 million.

The major areas of investment in the proposed budget include:

 

1. Upgraded audit services to improve accountability, monitoring and oversight;
2. An upgraded Division for Human Resources to implement the first comprehensive Human Resources Strategy for UNFPA whose implementation has begun on phased basis;
    
3. Improved country office connectivity for the Enterprise Resource Planning system;
4. Increased involvement in inter-agency collaboration and joint programming; and
    
5. Improved staff security.

 Resources

The income framework underlying this budget proposal is more positive than the one we presented to you last year. After the slight drop in regular resources in 2002 that I have just mentioned, a more favorable trend in our resource situation has been recorded in 2003. I am extremely pleased to report that our income has increased to the point that the funding gap caused by the loss of a major contribution has been entirely offset in 2003.

As a result, the austerity plan that we had incorporated in the revised budget for 2002-2003 (DP/FPA/2002/9) has not been necessary. Furthermore, with expenditures of nearly $74 million in 2002 and approximately $82 million in 2003, we are planning to spend in full the $155.2 million appropriated by the Board last year.

In line with this positive trend, the proposed budget for 2004-2005 is based on $750.6 million for total income. This consists of $586.7 million in regular resources and $163.9 million in other resources. Based on our income performance in 2003, we believe that these projections are fair and conservative.

Cost structure

The cover page of the biennial support budget document states: “The proposal presents a biennial support budget that provides greater support to country offices, growth where affordable and cost containment where necessary.”

I cannot think of a more apt phrase to describe what a budget is supposed to be: greater support to the most important area of our work, spending a bit more where we can afford it, and clamping down where we absolutely have to. This is precisely how we viewed this budget when we developed it.

Several operational costs have been limited to their 2002-2003 baseline to offset mandatory cost increases and allow the release of further resources in support of strategic investments. Thanks to these cost containment efforts, the ratio of gross biennial support budget to total resources is only 0.5 per cent higher than the ratio of the revised budget proposal for 2002-2003. This is despite higher mandatory costs, including higher salaries for international professional staff, rising costs of services provided by other United Nations agencies, and a steep increase in staff security costs.

As a result, even with an expanded resource base, the ratio of the proposed budget to income is marginally higher than we would have liked or wanted. And yet, we feel the budget proposals before you are reasonable and prudent.

Posts

We are pleased that the ACABQ endorsed the establishment of the four national Professional posts and the audit specialist post at headquarters as proposed in the budget. This will certainly help strengthen the Fund's internal audit capacity and the support provided to staff members on HIV/AIDS issues, in accordance with recent recommendations from the Secretary-General.

We feel it is essential, however, that the remaining four professional posts at headquarters that are proposed in the budget, also be approved. These posts are integral to efforts to strengthen programme management and performance, and to provide UNFPA with the human resources it needs to implement the new strategic direction and to meet the increasing demands placed upon it, as part of the various interagency mechanisms in which it is expected to be active.

The two posts in the Division for Human Resources focus on performance management, career development, training and learning, and human resources planning, all of which are indispensable if UNFPA is to have the human resources it needs to achieve its goals. The P-5 post in the Division for Oversight Services is needed to strengthen the Fund’s capacity in monitoring and evaluation for results-based management. The fourth post—a P-4 Security Officer in the Division for Management Services— (the only security post we would have) is required due to the increase in the work related to staff security at Headquarters and in the field, a function which is presently carried out as one among many of the responsibilities of the Deputy of the Division of Management Services. It will also enable the Fund to keep abreast of the latest security concerns, to participate in interagency security related functions and to provide consistent, reliable and timely advice to staff, especially to those in country offices.

Allow me to highlight that, at headquarters, the additional cost for the new posts proposed has been offset by reducing one Professional post and 8 General Service posts. I would like to point out that UNFPA’s staffing levels remain modest in view of its ever-increasing scope of work. In 2001 we requested 1,020 posts. Our requirements have now dropped to 972 posts, the same amount we requested for the 1998-1999 biennium.

Share of country office resources

The post distribution is increasingly favourable to country offices, with more international professional posts (up from 89 to 99) and local professional posts (up from 170 to 221). The proposal for 2004-2005 reflects a net increase of 4 posts in the field balanced by an identical reduction at headquarters.

Overall, the share of resources appropriated to country offices has increased to 51 per cent. I am pleased to announce that our budget now appropriates more resources to country offices than to headquarters.

This reflects UNFPA’s determination to provide increasing strength to its country offices in support of our programme. We are pleased with this result and are committed to strengthening our country offices even further.

Enterprise Resource Planning system

Last year, the Board approved $10 million to fund start-up costs of the Enterprise Resource Planning system. This year, we are requesting a further $3.8 million to ensure that all start-up requirements will be met.

The Enterprise Resource Planning system is a major strategic element of the 2004-2005 budget proposal. Effective 1 January 2004, UNFPA will abandon a multitude of systems to endorse an integrated one that will automate management functions in the key areas of accounting, budgeting, human resources and procurement. This system, which UNFPA is adopting in conjunction with UNDP, will greatly enhance UNFPA’s ability to link programme results with resources.

Mr. President, Distinguished Delegates:

ACABQ concerns

Before I address the specific concerns expressed by ACABQ, I would first like to thank the Committee for its useful and helpful recommendations. In particular, we welcome the recommendation to discuss results-based budgeting techniques with the other United Nations funds and programmes. We are also pleased that the ACABQ notes that the resource framework for the proposed budget is consistent with the 2004-2007 multi-year funding framework that is currently being developed.

In addition to the concerns raised by ACABQ relating to the proposals for new posts, I would like to focus on the reclassification of posts as well as the alleged "top heaviness" of UNFPA.

Reclassifications

Mr. President, I should now like to turn to the issue of post reclassifications. At the outset, I would like to reiterate that the reclassifications contained in the budget proposal represent the completion of the first global post-classification exercise at UNFPA in 14 years. That exercise began over four years ago with a workforce planning exercise that sought to realign job descriptions with actual work performed and to identify new functions that should be performed.

Each post was assessed on its individual functions and on how its functions fit with, and contributed to, the goals and objectives of its unit, division and the Fund as a whole. At the same time, UNFPA undertook a thorough review of its organizational structure and how it matched the Fund's programme goals. As a result, the organization was realigned to enable it to address new and evolving challenges, based on the same number of posts performing higher level, more complex functions and increased responsibilities. The post descriptions were classified by independent, professional classifiers in accordance with established International Civil Service Commission (ICSC) standards.

The reclassification of the Professional posts at headquarters proposed for 2004-2005 emerged from the upgrading of the Office of Human Resources and the Office of Oversight and Evaluation into divisions and the realignment of the Division for Management Services. It also reflects the central importance of knowledge sharing as a UNFPA strategic priority.

In the field, the reclassification of the 158 local field posts is an integral part of the new office typology. This is designed to make optimal use of national staff and to develop national capacity to manage UNFPA's field office operations and to bolster UNFPA's involvement in policy making.

We strongly believe that the upgrading of these functions is indispensable to the overall success of the transition process. It is an integral part of the larger effort to transform UNFPA into a results-based organization.

Indeed, it seems inconceivable to us that we will be able to meet the complex demands of the changing environment we work in without a greatly strengthened capacity in human resources management, oversight, monitoring and evaluation, and knowledge sharing.

In many ways, the difference of opinion on this issue may in fact be a difference in perception. We see the upgrading of these offices and corresponding functions as sound management of human resources, and thus part of the solution, not part of the problem.

Top heaviness

Finally, I would like to address the issue of the alleged 'top heaviness' of the UNFPA post distribution, a concern that was also raised by ACABQ last year. We readily acknowledge that we have few entry-level posts at headquarters in the Professional category. But we would also like to point out that, due to the limited number of core posts at UNFPA and the increasing level of complexity of the work of the Fund, it is difficult for UNFPA to absorb junior-level posts at Headquarters.

Moreover, the overall picture is quite different if national Professional staff are included in the calculation. When local professional posts are taken into account, the post distribution is much less “top heavy”: 67 per cent of total professional posts are P-4 or below.

Conclusion

Mr. President, Distinguished Delegates:

I wish to conclude this statement by thanking you for your patience and attention. I also wish to inform you that our 135-donor campaign for 2003 is on track. To date, we have over 100 donors and I thank you for your support. I appeal to all those who have not yet made a pledge to do so without delay.

I now kindly request the President to give the floor to Mr. Gupta, Director of the Division for Management Services to present briefly the highlights of the proposed budget.

 Thank you.