SUNS  4332 Thursday 26 November 1998



UNITED NATIONS: SHELVES CREDIT-FUND PROPOSAL

United Nations, Nov 24 (IPS/Thalif Deen) -- The United Nations has shelved a proposal by Secretary-General Kofi Annan to create a billion-dollar revolving fund to relieve the world body of its ongoing cash-flow problems.

The proposal, cold-shouldered by an overwhelming majority of the 185 member states, is expected to be re-assessed at the next session of the U.N. General Assembly in September 1999.

"This gives us enough time to rethink the feasibility of the proposal," a Third World diplomat told IPS. "But as of now, there isn't enough support to carry it through."

The Revolving Credit Fund also was intended to help cash-strapped nations borrow money to pay their outstanding dues to the United Nation.

"The establishment of a revolving credit fund is not a solution to the organisation's financial crisis," Prayono Atiyanto of Indonesia told delegates Monday.

Speaking on behalf of the 133 developing nations of the Group of 77, Prayono said the UN's cash crisis was due largely to a single factor: the non-payment of assessed dues by a major contributor, the United States. "It is imperative that all member states pay their contributions in full, on time and without conditions," he said.

If they meet their obligations as mandated by the UN charter, he argued, there will be no reason for any revolving funds.

The US owes more than 1.4 billion dollars in outstanding dues, which in turn, has pushed the world body to near-bankruptcy. The United States is the largest single defaulter although other member states also owe money.

Nine countries have been stripped of their voting rights for not paying their UN dues: Bosnia, Cambodia, Congo, Dominica, Iraq, Liberia, Sao Tome and Principe, Somalia and Yugoslavia. But they owe small amounts compared to the U.S. arrears.

While the United States has withheld payments for political reasons, most of the other defaulters are in arrears because of financial factors.

As part of the restructuring of the UN system, Annan last year proposed the creation of the Revolving Credit Fund to help ease the organisation's financial problems. It was to have been financed from voluntary contributions by member states or through other means as the Assembly might decide from time to time.

Since the Secretary-General has no authority to borrow money from commercial banks or other financial institutions, Annan feels such a credit fund could temporarily fulfil the UN's cash needs.

The UN's Advisory Committee on Administrative and Budgetary Questions, a key committee dealing with finances, has also virtually rejected Annan's proposal. In a report last week to the General Assembly, the committee said that creating such a fund might dilute the focus on finding an effective political solution to the UN's cash crisis.

"Also, the proposed fund might burden States that already meet their financial obligations while it would not induce delinquent member states to pay their contributions in full and on time," it said.

Nestor Odaga-Jalomayo of Uganda said the General Assembly would be always willing to help the Secretary-General to resolve the organisation's financial problems. But he, too, felt the issue would
not be resolved by creating another fund.

The only way to deal with the problem was to get member states to pay their assessments in full, on time and without conditions, Odaga-Jalomayo said. "The General Assembly should concentrate on
getting that resolved, not on creating other funds that would be an additional burden to member states," he added.

Dulce Buergo-Rodriguez of Cuba pointed out that Annan's proposal did not provide a solution to the problem. "The problem is political, not financial," she said.

Joseph Connor, Under-Secretary-General for Management, told delegates that despite recent U.S. contributions, the United Nations was still expected to have a deficit of some 50 million dollars by the end of this year.

The organisation had only been able to function by borrowing from peacekeeping funds, he said. As a result, it was unable to pay some 864 million dollars to countries providing troops and equipment for peacekeeping operations.

"That measure was unsatisfactory and finally imprudent, but it was also unsustainable since peacekeeping activities have declined," he added.

As the Secretary-General had emphasized, Connor said, the cash-flow problem would only be fully resolved if member states paid their dues in full. Until then, added Connor, ways would have to be found to deal with periodic cash shortages.