UNHCR: 2006 BUDGET CONSULTATIONS AND STANDING

UNCLAS SECTION 01 OF 04 GENEVA 001742 SIPDIS PRM/MCE AND REFCOORDS E.O. 12958: N/A TAGS: PREF UNHCR SUBJECT: UNHCR: 2006 BUDGET CONSULTATIONS AND STANDING COMMITTEE DISCUSSION REF: A. GENEVA 1604 ¶B. GENEVA 1605 ¶1. (U) SUMMARY: Donors and staff of the United Nations High Commissioner for Refugees (UNHCR) have held multiple discussions as UNHCR shapes its 2006 budget and its plans for the second half of 2005. In all of these discussions, UNHCR has highlighted its (new) commitment to results-based management -- which it defines in the budgetary context as starting with needs assessments, setting a hierarchy of objectives at the beginning of planning, involving partners in these processes, and defining both total needs and the smaller sub-set of activities which UNHCR will cover. The planning-for-2006 process has not yielded consistent results and donors still are presented budget figures without a clear picture of the underlying needs. However, the process was less arbitrary than in past years. Donors will now be confronted with a larger annual budget more accurately reflecting needs. Current under-funding of the 2005 budget, however, leaves room for worry about whether the more comprehensive 2006 budget will garner the necessary support. Some donors have objected to UNHCR's budget continuing to rise while the worldwide number of refugees declines. ¶2. (U) Summary, continued: UNHCR is proposing a 2006 budget of USD 1,144.3 million, including some USD 70 million for Chad. Meanwhile, the organization expects a possible shortfall of USD 136.1 million under its current 2005 annual budget (AB) and is imposing a 10 per cent freeze on its administrative and headquarters budget and a 7.5 per cent freeze on field activities. Refs A and B report on the May "informal" consultation with key donors; this meeting was followed June 14 by another "informal" meeting with all Executive Committee (EXCOM) members and Standing Committee observers. A third session took place during the first day of the Standing Committee (SC) session, June 27. END SUMMARY. -------------- 2006 BUDGET HIGHLIGHTS -------------- ¶3. (U) Presenting the 2006 budget to donors during the Standing Committee session, UNHCR Controller Takizawa acknowledged that the USD 1,144.3 million figure was USD 162 million more than the 2005 annual budget (AB). Initial program submissions from field offices and headquarter units for 2006 amounted to USD 1,158.7 million. Needs totaling another USD 70 million were identified to "mainstream" the Chad Supplementary Budget (SB). After an extensive review process, these submissions were reduced to USD 1,144.3 million (including Chad.) The largest increase from 2005 was 40 per cent in Africa (USD 110 million). Further increases included USD 5 million for Asia and Pacific; USD 7 million for Europe; USD 5.5 million for the Americas; USD 8.2 million for Global Operations; and USD 17 million for Headquarters. There was no increase in the CASWANAME region. Takizawa also attributed increases, especially in HQ costs, to exchange rate variations. This provisional amount corresponds to an increase of some 16.6 per cent over the 2004 Annual Program Budget. ¶4. (U) Takizawa expressed concern about the "fundability of the budget." He noted that the 2006 AB figure was roughly on par with the total 2005 budget (AB and supplementary budgets (SBs).) UNHCR hoped it would be okay in 2006, if there were no new emergencies requiring SBs; if impending emergencies in some regions could be balanced by phase-out in others; and if the impact of exchange rate fluctuations and inflation was minimal. This was a worrying set of assumptions. -------------- 2005 BUDGET STATUS -------------- ¶5. (U) UNHCR's Executive Committee approved budgetary requirements for 2005 amounting to USD 981.6 million, comprising USD 945.8 million for the AB (including USD 62.5 million and USD 50 million respectively for Operational Reserve Categories I and II),USD 28.8 million for the United Nations Regular Budget and USD 7 million for Junior Professional Officers (JPOs). However, the AB was increased by USD 7.3 million to USD 988.9 million in order to absorb an additional Regular Budget allocation related to unbudgeted security enhancements at UNHCR,s Headquarters (USD 5.8 million) and USD 1.5 million to the JPO budget. The 2005 SBs currently amount to USD 375.6 million. ¶6. (U) As of June 22, the total voluntary contributions received in 2005 against these requirements amounted to USD 873.1 million, including USD 689.3 million for the AB, some USD 171.7 million toward the SB, USD 3.7 million toward JPOs, and USD 8.4 million in reserved pledges. UNHCR believes the AB is under-funded compared to 2004 because the SBs are "competing" with the AB and drawing away funds. ¶7. (U) At the June 14 meeting, Takizawa reported that funds were lower than expected, primarily due to less carryover from 2004 and exchange rate losses. As a precaution against such potential funding shortfalls, the High Commissioner in early 2005 imposed caps on the program and support budgets. Thus, program and non-staff administrative budgets were capped at 95 per cent. The caps were implemented at the bureau level rather than the country level. ¶8. (U) At the Standing Committee meeting on June 28, UNHCR announced that it expects further funding shortfalls, with an estimated USD 225 million deficit (including a USD 136.1 million shortfall under its 2005 AB.) As a result, UNHCR will do a second round of capping -- going up to 10 per cent for support and headquarters, and up to 7.5 per cent for operations. The High Commissioner decided to cap operations at a lower level than services, UNHCR said, in order to minimize the impact on the field. ¶9. (U) Deputy High Commissioner Wendy Chamberlin noted that caps are a signal to partners and managers that UNHCR will not meet "project or program" targets. However, at the end of the third or fourth quarter, UNHCR will evaluate the situation and possibly lift the caps. Factors that will impact this decision include additional contributions, reduction in ambitions and activities, and perhaps most optimal, management efficiencies. -------------- BUDGETARY CONCERNS -------------- ¶10. (U) At both the June informals and the Standing Committee meeting (SC),delegations asked about the relationship between the number of beneficiaries UNHCR serves and the budget, arguing that with the number of refugees decreasing, the budget should as well. External Relations Director Anne Willem Bijleveld asserted that UNHCR is not meeting minimum standards in many cases. The budget should not decrease until UNHCR is able to meet this core objective. At the SC, Takizawa warned delegates not to link only population trends with the budget, as other factors such as exchange rate losses and inflation have an influence. Takizawa noted UNHCR is anticipating a fall in the dollar in 2006 and has budgeted approximately $30 million against that expectation. UNHCR also has increased its population of concern from to 17 million to almost 19 million with IDPs and stateless persons among the increase. Some delegations complained UNHCR's budget growth seemed "almost systematic" over the last years. ¶11. (U) Takizawa explained that UNHCR has changed how it budgets staff costs. UNHCR previously budgeted on the basis of a certain percent of posts being vacant, but closer examination had revealed a near 100 percent employment rate, even though some (paid) employees were on leave or in transit between posts. Delegations requested more information on the status of staff-in-between-assignments (SIBAs) and expressed concern that some employees stay in that status for prolonged periods, not working but being paid. While asserting most SIBAs are only in that status short term and perform other functions in the interim, Takizawa acknowledged some were not contributing. Takizawa promised to provide papers on how UNHCR will now budget staff costs as well as on UNHCR's planning for currency fluctuation ¶12. (U) At the SC, several delegations expressed concern over the impact of both potential deficits and potential surpluses on UNHCR's activities. Chamberlin explained that UNHCR did not want a budget deficit or a carryover, as either one implies failure to budget and plan correctly. However, according to Takizawa, it would be a problem if UNHCR reduced the carryover to zero. Instead, Takizawa suggested that a carryover of USD 20 to 40 million was reasonable. -------------- RUNNING THEMES: RBM, NBA, COP -------------- ¶13. (U) Reviewing again the status of UNHCR's efforts to move towards Results-Based Management (RBM) (see reftel), Chamberlin updated donors at the Standing Committee on developments since the May informal donor consultations. As was mentioned in May, Chamberlin noted that UNHCR would focus on RBM by having a resource-based budget, creating a participatory planning process, determining refugee needs at the start of the planning process, seeking increased contributions (including from partners),and recognizing the gap between needs and resources. In keeping with earlier statements, Chamberlin stressed "greater empowerment to the field in the resource allocation process." ¶14. (U) In all three budget discussions, UNHCR officials reviewed how UNHCR's budget process for 2006 specifically called for a comprehensive needs-based assessment (NBA) to inform the Country Operation Plan. Most field offices submitted their requests with some sort of NBA, although the quality of the assessments varied. These submissions were reviewed for content and consistency at Headquarters, which -- "for the last time in 2006" -- also considered allocations across programs against a ceiling of USD 1.1 billion, established based on their calculation of what donors would consider fundable. The "raw" assessments from the field defined needs of approximately twice that figure. -------------- MANAGEMENT EFFICIENCIES -------------- ¶15. (U) As she did in May, Chamberlin again repeated at the June informals and Standing Committee that UNHCR's goal was "no net growth" for 2006, particularly for headquarters. In response to a U.S. question about which activities had been reduced to reflect a lower Global Operations budget, Chamberlin stated that they have limited activities in headquarters to standard setting in order for resources in the field to focus on implementation of activities. ¶16. (U) Additionally, Chamberlin stated that UNHCR made an effort not to increase staff at headquarters. To this end, UNHCR undertook a "90-10 prioritization exercise" -- directors had to identify the least necessary 10 percent of their budgets with the understanding that they would be asked to give up these activities to fund anything new. However, Chamberlin opined that 90-10 did not work very well. Instead, managers self-managed and came back to the table with close-to-zero net growth. Five positions for Burundi and Chad were incorporated as those programs shifted from SB to AB, several other positions were added but offset by other reductions: these include 4 positions added to the Inspector General's Office and 2 positions focused on organizational development. ¶17. (U) UNHCR also provided RMA with a document (faxed to PRM/MCE and PRP) showing where 196 new permanent posts were created in the field. Some of these posts were previously filled by consultants or technical advisors. Increases were partly offset by a reduction of 49 posts in CASWANAME. Some 86 requests for positions were denied. Responding to U.S. questions, UNHCR said that in the Americas, 14 positions would be posted to Colombia, Ecuador and Venezuela and 2 positions will focus on private sector fundraising in the U.S. and Canada. Two additional field posts for Europe, funded by transferring money from the Division of External Relations, will focus on private sector funding, particularly in Italy and Greece. Additionally, one post was regularized from Operational Reserve II for Chechnya -------------- -------------- Internally Displaced Persons - IDPs -------------- -------------- -------------- ¶18. (U) New activities for IDPs were not included in the 2006 budget. However, with new High Commissioner Guterres on board, UNHCR is in the process of "realigning" its IDP policy. UNHCR officials have suggested that when the population is a mixture of IDPs and refugees, funding for activities should come out of the AB; however, if either the UN Country Team or the UN Humanitarian Coordinator requests UNHCR to undertake activities solely for IDPs, funding should be financed by a SB. Takizawa noted that if the IDP policy were to change, financial rules might also need to change, particularly to allow a multi-year SB. ¶19. (U) At the SC, USdel expressed concern about UNHCR's taking on increased responsibilities, such as camp coordination activities for IDPs in Darfur and developing programs for stateless people, at the cost of refugee programs. However, other delegations such as the Sudanese delegation expressed a desire for more funds to be given to IDPs. -------------- -------------- Inspector General's Office - IGO -------------- -------------- ¶25. (U) At the request of the Swedish delegation during the SC, Chamberlin explained why the candidate preferred by the Inspector General and assignments board for the Investigations post was passed over in favor of the No. 2 candidate. According to Chamberlin, managers do not receive their first choice in almost 20 per cent of P5 and D1 assignments due to organizational needs. In this particular situation, Chamberlin reassured member states that Candidate No. 2 was selected because of his higher qualifications in relevant experience and legal knowledge. Chamberlin outlined the selection process and dealings with the Inspector General to alleviate concerns that the IGO would not be independent. -------------- -------------- SPECIFIC QUESTIONS POSED DURING DISCUSSIONS -------------- -------------- ¶26. (U) In response to questions posed by the U.S., UNHCR representatives provided the following answers: - Funds in West Africa are not/not adequate to meet needs, but UNHCR has to prioritize in the region and therefore has reduced care and maintenance activities in Guinea and also scaled down activities in Sierra Leone. - Activities for Togolese refugees were not included in the AB; USD 1.5 million was allocated from the Operational Reserve I (ORI). - The SB for the Democratic Republic of Congo was not included in the 2006 AB because of uncertainties on how the situation will develop. UNHCR is taking a "multiyear" approach (although their 3-year repatriation plan was not approved) because significant returnee areas have opened up and they are unsure of the level of funding needed from the SB. -Responding to concerns about UNHCR's engagements outside its mandate, Chamberlin said that certain earmarked funding for the tsunami could not be moved around or returned. UNHCR had been asked by the UN system to reactivate its projects in Aceh, but Chamberlin acknowledged that such activities fell outside UNHCR's core activities. (USdel encouraged UNHCR to increase consultations with member states prior to embarking on activities that go beyond UNHCR's refugee mandate.) ¶27. (U) Representatives from the Netherlands, Canada, Japan and Switzerland inquired at the June informal whether the proposed position for an Assistant High Commissioner was budgeted for in the 2006 AB. UNHCR representatives responded that because of attempts to mainstream Convention Plus, the position was indeed included as a placeholder, pending the High Commissioner's and ExCom's approval. If this position is approved and created, a D2 position will be abolished and an A/SYG position created in its place at an increased cost of USD 30,000. (Note: The four countries listed are skeptical about the position and were not happy that UNHCR budgeted for a position that is not yet approved.) ¶28. (U) In response to a question about broadening UNHCR's donor base, UNHCR acknowledged that the gap between funding and the budget is widening (the donor base has increased by 30 per cent, yet expenditures increased by 50 per cent). UNHCR continues to seek ways to close this funding gap, including by targeting the private sector. Moley