Identifier
Created
Classification
Origin
09UNROME22
2009-03-27 11:44:00
UNCLASSIFIED
UN Rome
Cable title:  

FAO 125TH FINANCE COMMITTEE HIGHLIGHTS: FUNDING FOR REFORM

Tags:  FAO EFIN AORC EAGR EAID KUNR UN 
pdf how-to read a cable
VZCZCXRO2066
RR RUEHRN
DE RUEHRN #0022/01 0861144
ZNR UUUUU ZZH
R 271144Z MAR 09
FM USMISSION UN ROME
TO RUEHC/SECSTATE WASHDC 1064
INFO RUEHRN/USMISSION UN ROME 1134
RUEHGV/USMISSION GENEVA 0228
RUCNDT/USMISSION USUN NEW YORK 0305
RUEHRC/USDA FAS WASHDC
RUEHC/USAID WASHDC
UNCLAS SECTION 01 OF 03 UN ROME 000022 

SIPDIS

USDA/FAS/ONA - REIMENSCHNEIDER, BERTSCH, DOUVELIS

E.O. 12958: N/A
TAGS: FAO EFIN AORC EAGR EAID KUNR UN
SUBJECT: FAO 125TH FINANCE COMMITTEE HIGHLIGHTS: FUNDING FOR REFORM

UNCLAS SECTION 01 OF 03 UN ROME 000022

SIPDIS

USDA/FAS/ONA - REIMENSCHNEIDER, BERTSCH, DOUVELIS

E.O. 12958: N/A
TAGS: FAO EFIN AORC EAGR EAID KUNR UN
SUBJECT: FAO 125TH FINANCE COMMITTEE HIGHLIGHTS: FUNDING FOR REFORM


1. (SBU) Member representatives of the Food and Agriculture
Organization's (FAO) Finance Committee (FC) met in Rome on March
9-10 to discuss funding for FAO's ambitious new reform program
and to review the agency's human resource management strategy.
Noting a shortfall in voluntary financial contributions to
launch all aspects of its reform plan, FAO management described
cost-free steps it has already initiated regarding
implementation of the Immediate Plan of Action (IPA) - FAO's
reform package approved by members at the November 2008
Conference. Management highlighted changes underway in human
resource management, financial accounting, procurement, and
reporting structures, but presented uneven information on costs
and savings associated with these changes. The FC reaffirmed
the primacy of IPA implementation and called for improved
communications with members on progress, based upon transparent,
understandable, and compelling financial reports. FC members
also called for management to clearly define a roadmap of action
on reform implementation. With the limited funds currently
available in the IPA Trust Fund, FAO will proceed with drafting
tenders for elements of the IPA with large cost implications (IT
systems, Enterprise Risk Management Study, HR evaluation and
training programs, and staff rotation policy). But, without
additional contributions by mid-year, it warned, issuance of
tenders and the reform process could be delayed. Several large
EU donors argued that FAO should reprioritize funds toward
reform on the basis of extra-budgetary contributions to
technical and other programs (e.g., the EU's EURO one billion
"food facility"). The absence of a USG pledge or contribution
to the reform trust fund continues to be a source of criticism
from both management and other members. End summary.

--------------
REVIEW OF THE IPA TRUST FUND
--------------


2. (U) The 123rd Session of FAO's Finance Committee took place
in Rome on March 9-10, chaired by Egypt, and attended by
Cameroon, China, Denmark, France, Germany, Mexico, Pakistan,
Panama, Uganda (not present),and the U.S. (Vice Chair,

represented by USUN Rome Charge d'Affaires). A full report of
the meeting is located at: HYPERLINK
"http://www.fao.org/unfao/bodies/fc/fc125/ind ex_en.htm"
www.fao.org/unfao/bodies/fc/fc125/index_en.ht m. In keeping with
recommendations of the recent FAO Independent External
Evaluation (IEE),the FC opened its session to silent observers
from all FAO member states. Reviewing the status of the IPA
Trust Fund as of March 6, FC members were told the fund
contained voluntary contributions totaling USD 3,130,856 with
total pledges from member states totaling USD 6.25 million. The
FC encouraged members to fulfil their pledges and called upon
others to contribute as a demonstration of the shared ownership
and commitment to the IPA. The Committee requested that the
status of the Trust Fund be a standing item on its agenda at
future meetings, including a summary of expenditures charged
against the Trust Fund.


3. (U) Responding to complaints from some members regarding the
quality of reports prepared for the FC, Deputy DG Butler
promised to improve communications and outreach by FAO senior
management, including fortnightly newsletters and briefings with
Rome-based members. The FC also considered possible designation
of a member state "champion" to encourage further pledges to the
Trust Fund. The FC heard that DG Diouf and the CoC/IEE Chair
had encouraged Trust Fund contributions during recent travel to
member states. The FC called upon member states to engage in
fund-raising, and encouraged Management support, including at
regional FAO conferences.

--------------
UPDATE ON IPA COSTS AND FUNDING MODALITIES
--------------


4. (U) Updated figures developed as part of a "bottom up" review
of the IPA indicated a reduction in the requirement for
voluntary funding in 2009 from USD 21.8 million (not including
7percent project support costs) to USD 18.6 million (USD 19.9
million including support costs). This included an additional
reduction of USD 0.42 million in preliminary cost estimates for
2010-11. While the lowered estimates for 2009 were due
primarily to delays in planned expenditureto 2010-11, overall
costs in 2010/11 were also reduced by USD 3.4 million, mainly
attributable to lower estimated costs for staff redeployment and
separation (from USD 12.4 million to USD 9 million).


5. (U) In reviewing the cost estimates for the IPA, the FC
stressed the paramount importance of a renewed Organization,
making FAO more efficient and effective. Members expressed
concern that updated budget figures contained only updated

UN ROME 00000022 002 OF 003


costs, not savings. Furthermore, the document contained some
editorial errors and inconsistencies between tabular and
narrative presentation. The FC suggested several changes in the
presentation of data on this item in future sessions including:
a more visible presentation of the savings that would be derived
from IPA actions; improved formatting to align explanatory text
adjacent to tabular presentation; and finally, an account of
actual expenditures against forecasts and available budget.
Timely availability of the document was important for full
consideration by Members.


6. (U) The Committee specifically requested that stage 2 costs
and savings estimates from the Root and Branch Review be
incorporated in the next IPA budget update. The Committee noted
that over half of the IPA actions could be initiated within the
planned Program of Work and Budget 2008-09 and therefore did not
require extra-budgetary funding.


7. (U) The Committee received clarification that the estimated
reduction in redeployment and separation costs in 2010-11 was
due to more timely action than originally assumed to redeploy
staff affected by delayering. In addition to the 13 headquarters
D-level posts already delayered in 2008, 27 D-level posts would
be delayered under the IPA, assuring that USD 17.4 million in
savings would accrue in the 2010-11 biennium. The Committee
also received reassurance that the forecast savings of USD 0.9
million in the TCP project cycle and approval processes was on
track for 2010-11, and that further savings could be identified
under the ongoing Root and Branch review. The FC urged
management to continue to search for savings during IPA
implementation.


8. (U) The Committee reiterated the importance of considering
all avenues for identifying resources, such as windfall savings
or from freed up Regular Program resources as a result of
extra-budgetary contributions in support of technical programs,
while ensuring that the planned Program of Work 2008-09 was
fully implemented.


9. (U) Regarding the progress made in meeting the efficiency
savings targets of USD 22.1 million in 2008-09, management
reported that USD 15.2 million in actual efficiency savings were
expected to be achieved with the balance of USD 6.9 million to
be found from one-time measures such as vacancies and a phased
implementation of decentralization. The Committee regreted the
failure to fully meet targeted levels of efficiency savings and
asked to receive a detailed update on efficiency savings at its
next session.


10. (U) The Committee noted that Council at its 119th Session in
November 2000 had endorsed a policy on support cost
reimbursements based on the principle of a reasonable alignment
of charges to actual costs of providing administrative and
operational support to projects. It appreciated that no waivers
to this policy had been requested or granted since 2000, and
recalled its concern at the persistent and growing
under-recovery of administrative and operational support costs
for extra-budgetary activities. The Committee supported
continuing interagency consultations on the harmonization of
cost recovery policies.


11. (U) In the case of the IPA Trust Fund, the Committee was
satisfied that the proposed reduction of the project support
cost to 7 percent was in accordance with the policy, since
operational support was provided as a direct project cost in the
project budget. While acknowledging the application of the
policy, some Members were of the view that the IPA Trust Fund
contained a very unique package of activities to strengthen FAO
and a more flexible application of the policy might be
appropriate (Note: A 13 percent support cost rate was applied
to the previous IEE Trust Fund for preparation of the IEE
report. End note). The Committee expressed concern that the
only expenditure charged against the Trust Fund to date
pertained to some of the interpretation and translation costs
for the meetings for the Conference Committee and its subsidiary
bodies. The FC urged management to proceed with tenders for
other key elements of the IPA such as the Enterprise Risk
Management Study as a signal of its intent to proceed
expeditiously with full IPA implementation and to boost donor
confidence.


12. (U) Management reported that it would need to prioritize
actions in 2009 and postpone others to 2010-11 if substantial
additional voluntary contributions were not received by mid-May

2009. It requested that this be fully considered in the next
report to the Finance Committee. Senior management is looking
carefully at regular program spending and possibilities for
reprioritization of projected cost savings and program funding

UN ROME 00000022 003 OF 003


in areas where unanticipated extrabudgetary funding is expected.
The EU members of the FC (Italy, France, Germany) urged FAO
management to consider ways to make use of a portion of the
voluntary contribution to FAO from the EC EURO one billion "Food
Facility" to support the IPA.

--------------
IMPLEMENTATION OF HUMAN RESOURCES STRATEGY
--------------


13. (U) The FC took note of the Progress Report on the
Implementation of the Human Resources Management Strategy and
Policy Framework and stressed that human resources (HR)
management was fundamental and constituted a key component of
the FAO reform. Looking forward, management reported that an
initial review of cost estimates of the proposed rotation policy
would likely reduce cost estimates. Reaffirming that the HR
strategy framework should be a standing item on the agenda of
its future sessions, the Committee requested that a "road map"
be developed with timelines and measurable indicators for the
implementation of the actions prescribed in the strategy, for
consideration at its 126th Session to be held in May 2009.

--------------
WORKING METHODS OF THE FINANCE COMMITTEE
--------------


14. (U) In accordance with recommendation of the Independent
External Evaluation, the FC decided that the report of the 125th
Session should be made available to all Members of the CoC-IEE
as soon as it was formally adopted. Recognizing the need for
close coordination between the FC and the CoC-IEE, the FC asked
its Chairman to coordinate with the Chairperson of the CoC-IEE
on this issue.

--------------
COMMENT
--------------


15. (SBU) The reform process at FAO is underway, with a growing
momentum that we expect to continue even if the IPA is not fully
funded. That said, other members - developed and developing
alike - have drawn attention in private and in public to the
absence of a USG contribution to the reform trust fund. They
believe that our calls for major reforms at FAO should be
followed by a financial commitment to the trust fund for reform.
The Europeans, in particular, who note frequently that they
have provided over ninety percent of the trust fund
contributions to date, question our commitment to the
organization. Even Brazil, having donated a hundred thousand
dollars to the trust fund, is getting much mileage from its
meagre contribution.
BRUDVIGLA