I am pleased to deliver this statement on the Midterm review of the UNDP integrated budget on behalf of Australia, Germany, the Netherlands, New Zealand, Sweden, Switzerland, United Kingdom, the United States and my own country, Norway.
First of all, we find it very positive that in this challenging financial situation, UNDP has been able to shield the programmatic component in its allocation of available regular resources, as well as maintained investments in development effectiveness and support for co-ordination activities. As we have learned at this meeting, UNDP is well on its way to achieve the development outcomes in the strategic plan.
UNDP has succeeded in a considerable reduction in the share of regular resources allocated to the institutional component of the budget. We are aware that this is not primarily a response to the dramatic reductions in funding, but to some extent an outcome of the structural changes. This means that the room for manoeuvre will be more limited in the years ahead.
Does UNDP envisage further possibility to reduce costs on the institutional side? The hard question is, how will the resource plan in terms of actual expenditure look like by the end of 2017, if the trend of declining contributions continue?
We note that UNDP has managed to shield the budget items that the Board decided to protect. We are aware that protecting certain budget lines comes at a cost. Support for several global activities had to be scaled down, including gender mainstreaming and services related to policy development and technical advice. Parallel to this, the structural reforms have strengthened capacities for advisory services at the regional level.
It would be interesting to hear some reflections from the UNDP management on the impact on reduced funding for development effectiveness in such a wider perspective, as well as alternative options to finance or reorganize some of the global services that have been scaled down.
Regular resources should not subsidize the cost of programmes funded by other sources. This is an important principle, and we find it encouraging that UNDP by end of 2015 had managed to exceed its ambition with regard to compliance with the new GMS cost-recovery policy. This is especially positive considering the downward trend of other incomes.
However, it is a concern to us that there has been necessary to spend nearly USD 30 million more of the cost-recovery income on development effectiveness activities than planned in the budget. We recognize that this relates to the availability of alternative sources of funding, but would welcome an explanation.
We look forward to discuss this more in detail during the September session, and encourage you to continue your efforts to fully implement all aspects of the cost-recovery policy, including the systematic application of the cost recovery rate, and direct charging of eligible programmatic and development effectiveness costs at project and program levels.
This is our first opportunity to discuss UNDP’s experiences with results based budgeting and the integrated approach. On the programmatic aspect of the budget we have only received fragmented information, and limited narrative analysis. We wish UNDP had used the MTR as an opportunity to more fully share its experiences with all aspects of the new integrated budget approach.
The most visible aspect of the program side of the integrated budget is the planning and allocation of resources to the seven development outcomes. In 2013, we agreed on a distribution of regular resources, as well as expected earmarked funding. Two years into the planning period, available information shows that funding is falling short with a substantial margin for four of the seven outcomes.
There appears to be a correlation between the funding shortage and performance for outcome 2. But the pattern is less clear for the others. I.e. we note quite a paradox with regard to outcome 4, which halfway into the planning period has received only 34% of the planned regular and 8% of the needed earmarked funding for the gender activities, while progress against milestones exceeds 100% for all outputs.
This illustrates the need for UNDP to further analyze its experiences from this approach. For example, to what extent has UNDP actively sought to mobilize or reallocate resources towards the under-funded outcomes?
It appears from the updated resource plan for the four-year period that the programmatic components of the integrated budget will be reduced by approximately USD 1 billion; mainly through reduced earmarked funding. It would be useful to get an indication how you expect this to affect the various outcomes.
The reduced regular funding of development results will also require adjustments in the indicative allocations to each of the outcomes. How will UNDP approach this? Will there be reductions proportional to the original distribution, or, eventually, will the relative distribution be adjusted according to the updated picture of demand and capacity to utilize resources?
As noted above, we believe it would be useful to develop a coherent rationale to link budgeting and resource allocation to program performance.
An important element of this endeavor is the Integrated Results and Resource Framework (IRRF), which as it stands now, is a great improvement over past budgeting and results reporting instruments. But, as expressed in several statements this week about the MTR of the strategic plan, there are areas that need to be further improved.
Relevant aggregated budget information is available, but often not in the same format as in the budget documents made available for the board in 2013. This has made our preparations for this session unnecessarily time consuming. While actual figures for 2014-2015 are available, these are often merged with the 2016-2017 planning figures.
To get a clearer and realistic understanding about UNDP’s expectations for the remaining of the planning period, it would have been useful if the documentation more coherently could have included tables that juxtaposed the two biennia of the planning period.
In 2013, several board members questioned the high level of aggregation in the budget, and it was necessary for UNDP to produce an addendum of more detailed information. There was especially a need for a further breakdown of some core budget posts. One important area was, and still is, the allocation to the Office of Audit and Investigation, the Ethics Office, and the Evaluation Office.
The budget decision of the board in 2013 clearly called for future budget information on these functions to be presented through distinct line items. It is disappointing that in the information submitted to the board, it was not possible to identify the level of resources spent or planned for each of these vital functions. We have noted that ACABQ as well has pointed out the need for additional information.
We appreciate that UNDP has contributed to the coordination of the UN development system; both in financial terms and, in the capacity as head of the UNDG, as an advocate for the importance of the resident coordinator system and for application of the Standard Operational Procedures.
We encourage continuing improvement to the collaboration among agencies to strengthen coordination to contribute to the overall success of the UN’s work, and welcome UNDP’s commitment to maintain its support for co-ordination activities.
With regard to future financing of the Resident Coordinator system, we expect UNDP allocations for this purpose to be guided by intergovernmental agreement in the next QCPR as well as the relevant UNDG cost-sharing arrangement.