Statement on Financial, Budgetary and Administrative Matters
Statement by Rebeca Grynspan, Associate Administrator, UNDP
UNDP/UNFPA Executive Board
Item 2: Financial, Budgetary and Administrative Matters
Wednesday, 1 September 2010
Ladies and Gentlemen,
I am pleased to introduce the Annual Review of the Financial Situation 2009 (contained in DP/2010/35 and addendum 1) which is part of agenda item 2: Financial, Budgetary and Administrative Matters.
Annual Review of the Financial Situation, 2009
UNDP’s total income in 2009, including UNCDF and UNIFEM, was $5.8 billion, a 4% decrease when compared to the total income of $6 billion in 2008. Total value of contributions in 2009 slightly exceeded the targets (by $0.27 billion) and estimate endorsed by the Executive Board in the Strategic Plan.
Contributions to regular (core) resources decreased in 2009 by 8% to $1 billion from $1.1 billion in 2008 and represented 81% of the 2009 target endorsed by the Executive Board in the Strategic Plan.
Contributions to non-core (or “Other”) resources decreased by 1% to $4.13 billion in 2009 from $4.16 billion in 2008. Despite the minor decrease, the 2009 non-core resource contributions slightly exceeded the 2009 estimates endorsed by the Executive Board in the Strategic Plan. It should be highlighted, however, that within the non-core envelope, programme country government contributions (government cost-sharing) decreased by 25% (from $0.96 billion in 2008 to $0.72 billion in 2009), while bilateral and multi-lateral contributions increased by 12%.
In 2009, the ratio between regular resources and other resources remained imbalanced at 1 to 4. This remains a matter of concern. In order to respond to national priorities and support the programme countries in achieving their development goals, UNDP remains in need of an adequate and predictable base of regular resources, as facing the bedlock of UNDP programmatic activities.
Overall expenditure in 2009 amounted to $5.53 billion with an increase of 3% as compared to 2008. Regular resources expenditure reached $1.17 billion, while other resources expenditure (non-core) amounted to $4.18 billion, which is similar to that of 2008.
The 2009 overall increase in total expenditure shows UNDP’s commitment to support the global agenda for development and the development priorities of the programme countries. In fact, in 2009, UNDP’s core resources expenditures exceeded the core resource contributions by $160 million. This amount was funded from prior years’ unexpended resource balances.
In 2009, UNDP continued to successfully avoid any loss of principal in its investments as a result of the ongoing volatile financial market conditions. However, the conservative investment portfolio, combined with a lower interest rate environment, resulted in a reduction in interest income, which yielded to 2.22% in 2009 as compared to 3.66% in 2008. The current lower yields are expected to continue through 2010.
UNDP remains committed to its role as an administrator of the Resident Co-ordinator system and its implications for the UN system as a whole. In 2009, the value of fund flows of Multi-Donor Trust Funds, the joint programmes and the support to other United Nations organizations totalled $1.78 billion.
Projections for 2010 suggest a drop in total contributions to regular resources due to reductions in contributions and especially the exchange rate volatility. As the impact of the global recession continues to be felt, we are now faced with serious challenges to meet the level of contributions contained in the Strategic Plan. The current projected total contributions to regular resources of $970 million for 2010 are approximately 30% below the $1.4 billion targeted in the Strategic Plan for this year.
We would like to request all Member States to support UNDP in reaching resource targets which is set out in the Strategic Plan approved by the Executive Board and as early as possible, to commit contributions to UNDP regular resources for 2010 and onwards through multi-year pledges if possible. Recalling the importance of funding predictability, UNDP also requests the donors to continue improving the timeliness of payments of contributions, which is essential to avoid liquidity and constraints in regular resources.
I would also like to take this opportunity to update you on the status of International Public Sector Accounting Standards (IPSAS) implementation in UNDP. The project is on track for 2012 adoption as significant progress has been achieved in all its policy, business, and technical areas. The progress achieved to date has included the completion of policy analysis, business requirements and transition implications of the IPSAS standards applicable to UNDP. Important progress has been made to prepare the entire organization and its partners for the implementation of IPSAS.
In order to ensure that IPSAS remains one of the key priorities of the organization, the Operations Group (OG), which I chair and convene, will continue to be the body to endorse all decisions for the IPSAS related activities. I should highlight that in the course of the last four months alone the OG has met several times to discuss IPSAS and its profound implications for the organization.
Over the coming months, UNDP will concentrate on completing its preparatory work towards a smooth organizational transition to IPSAS. Training programmes and communications initiatives will be vigorously pursued to build the necessary awareness and understanding of IPSAS and its related concepts throughout the organization, and in the programme countries, donors, and partners. The IPSAS Programme will also continue to work closely with the Audit Advisory Committee, the Office of Audit and Investigations, and the United Nations Board of Auditors. Given the nature and complexity of IPSAS adoption and its impact on financial reporting, the input of the United Nations Board of Auditors is critically important; hence, their continued advice will be sought throughout the implementation period.
As my last remark, I would like to refer to the statement by the Administrator in regards to the UN Board of Auditors’ unqualified audit opinion on UNDP for its 2008-2009 financial statements. Noting that UNDP also had an unqualified audit report in the biennium 2006-2007, we will build on this achievement and will continue to further improve our internal controls and financial management.
I and my colleagues stand ready to respond to any queries that you may have.