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SIXTH ITEM ON THE AGENDA

Programme and Budget proposals for 1998-99

1. During the discussion in the Committee on 21 March of the Director-General's proposals to adjust the original proposals (GB.268/PFA/6/3) there appeared to be broad acceptance of most of the adjustments suggested, (notwithstanding certain hesitations, which will be recorded in the Third Report of the Committee), apart from that concerning the suppression of three senior posts associated with General Management. In order to advance the work of the Committee the present document presents three scenarios, as suggested by the representative of the Government of Germany towards the conclusion of the discussion, as follows:

Scenario I: No reductions other than those already accepted on 21 March

2. If no further reductions are agreed, then the acceptance of all the adjustments contained in categories A, B, D and E of GB.268/PFA/6/3 would imply an overall budget level of $549,298,824 in constant dollars (i.e. a reduction of 5.2 per cent in real terms), corresponding to $560,031,890 in nominal dollars at a constant exchange rate of 1.16 Swiss francs to the dollar (i.e. a decrease in nominal dollar terms of 3.4 per cent). At the rate of exchange prevailing on 19 March 1997 (1.44 Swiss francs to the dollar), the recosted budget would be approximately equivalent to $487 million or a reduction of 15.9 per cent compared with the corresponding level for the biennium 1996-97.

Scenario II: Further reductions as suggested by the Director-General in the course of the discussion on 21 March

3. The further adjustments suggested by the Director-General in his oral statements on 21 March are detailed in Appendix I attached. If these reductions were accepted, this would imply an overall budget level of $547,101,620 in constant dollars (i.e. a decrease of 5.6 per cent in real terms compared with the budget approved by the Conference in June 1995); which after providing for cost increases corresponds to $557,795,050 at an exchange of 1.16 Swiss francs to the dollar, (i.e. a decrease in nominal dollar terms of 3.75 per cent). At the rate of exchange prevailing on 19 March 1997 (1.44 Swiss francs to the dollar), the recosted budget would be equivalent to approximately $485 million or a reduction of 16.3 per cent compared with the corresponding level for the biennium 1996-97.

Scenario III: Further reductions "across-the-board"

4. The most neutral way of reducing budgetary provisions in the headquarters major programmes is to reduce the present provision for contractual services in the same proportion for each major programme. The main components in this object of expenditure are external collaboration, which includes consultancy services in specialist fields and external printing. In the regions it is envisaged to make a reduction in non-staff costs in proportion to the total budget for each region. (This reduction will in fact be considerably lower in proportion to the total budget for the regional major programmes than the corresponding proportion for headquarters major programmes.) Finally, in Scenario III it is suggested to maintain three reductions which already figure in Scenario II, namely: the elimination of any provision for the replenishment of the Building and Accommodation Fund; the deletion of one General Service post under major programme 220 (Relations, meetings and documents services); and the reduction of resources for the enhancement of the usefulness of ILO databases (under major programme 145). The reductions by major programme identified in this way are shown in Appendix II attached.

5. In Scenario III the overall level of the budget would be virtually identical to that indicated in paragraph 3 above.

6. When the work of the Committee has been concluded, a table will be prepared summarizing the total effect on the resource provision for each major programme of: the adjustments already agreed in principle, i.e. categories A, B, D and E of the earlier paper; and the decision now before it concerning the choice between Scenarios I, II and III. This summary table (similar in format to Summary Table 1 in the original proposals of the Director-General) will be attached to the Third Report of the Committee when it is submitted to the Governing Body.

7. The Committee may accordingly wish:

(a) to choose between Scenarios I, II and III summarized above and detailed in the appendices attached;

(b) to propose that the Governing Body recommend to the International Labour Conference at its 85th Session (June 1997) a provisional programme level of $...,...,...⁽¹⁾ estimated at the 1996-97 budget exchange rate of 1.16 Swiss francs to the US dollar, the final exchange rate and the corresponding US dollar level of the budget and Swiss franc assessment to be determined by the Conference;

(c) to submit to the Governing Body for proposal to the Conference at the same session a resolution for the adoption of the Programme and Budget for the 66th financial period (1998-99) and for the allocation of expenses among member States in that period in the following terms:

The General Conference of the International Labour Organization, in virtue of the Financial Regulations, adopts for the 66th financial period, ending 31 December 1999, the budget of expenditure for the International Labour Organization amounting to $......... and the budget of income amounting to $........., which, at the budget rate of exchange of .... Swiss francs to the US dollar, amounts to ............. Swiss francs.

Bearing in mind --

• that, in adopting the budgets of income and expenditure for the 65th financial period, the General Conference requested the Director-General to present proposals to the Programme, Financial and Administrative Committee for adjustments to the budget of expenditure;
• that the Governing Body, at its 264th (November 1995) Session, accordingly agreed to make downward adjustments amounting to $21,704,950;
• that, in consequence, if the budget of income is fully received, it is expected that there will be a budgetary surplus for the 65th financial period arising from the downward adjustments and amounting to $21,704,950, which, at the budget rate of exchange for that financial period, would amount to 25,177,742 Swiss francs;

the General Conference resolves --

• that, in derogation from article 18 of the Financial Regulations, the said expected budgetary surplus of 25,177,742 Swiss francs shall be treated as budgetary income for 1998;
• that, in derogation from article 10.1 of the Financial Regulations, the remainder of the budget of income, denominated in Swiss francs, shall be financed from contributions from member States amounting to ........... Swiss francs in 1998 and ........... Swiss francs in 1999, allocated among member States in accordance with the scale of contributions recommended by the Finance Committee of Government Representatives for those years; and
• that, should the said budgetary surplus be less than 25,177,742 Swiss francs, arrears of contributions received shall be used to finance the income budget for the 66th financial period, subject however to the resolution adopted by the General Conference at its 82nd Session (June 1995) concerning the utilization of arrears of contributions to cover budgetary deficits.

Geneva, 24 March 1997.

Point for decision: Paragraph 7.

1. The figure to be inserted here is $560,031,890 under Scenario I; and $557,795,050 under Scenarios II and III.

Appendix I

The total shown above in constant dollars becomes $2.3 million when cost increases are incorporated.

Appendix II