UNESCO DG Presents Program Budget Options for 2006-7

DIRECTOR-GENERAL’S INTRODUCTION TO
THE GENERAL DEBATE OF THE EXECUTIVE BOARD

"Four options have been foreseen, two based on a “zero real growth” scenario and two on a “zero nominal growth” scenario.

- Option 1 is the full zero real growth scenario because it includes cost increases that are due to inflation (US$ 37.8 million), reimbursement of the loan for Headquarters renovation (US$ 8.4 million) and new security measures at Headquarters and in the field (US$ 12.3 million). This option allows the Organization to maintain its “purchasing power” at the current level and, through internal adjustments, to continue pursuing the concentration and reform processes.

- Option 2 retains only cost increases that are due to inflation. The additional costs that are linked to the loan and to security (US$ 20.7 million) will be “absorbed” through austerity measures. Although this scenario implies redeployments and new economy measures, it should nevertheless permit the preservation of essential gains and would not slow down the reform process unduly.

- Option 3, built on a zero real growth hypothesis, would have an extremely negative effect on the Organization. This scenario provides for the absorption of the increases that result from inflation (US$ 37.8 million) but adds to the current base (US$ 610 million) the amounts needed for reimbursement of the loan and for security. The need to “absorb” nearly US$ 40 million (of which US$ 25 million are linked to rises in staff costs that the Organization is compelled to pay) will necessarily lead to a “cut” in programmes, with the maximum to be hoped for being a preservation of the “top priorities” at their current level.

- Option 4 – outright zero nominal growth, implying as it does an “absorption” or reduction of the budget by US$ 58.5 million – would have a catastrophic impact. To achieve the required savings, the gains made in the reform process, including the decentralization strategy, would have to be called into question and the programme, including the most urgent priorities, would need to be reduced, thus causing a drastic decline of the ratios (staff/programme; programme sectors/central services; Headquarters/Field) that have improved over the last few years. This would be a heavy blow against the progress made by UNESCO in strategic domains and against the recent progress observed in terms of efficiency and visibility."