Update on programme and funding projections for 1995 and tentative estimates for the 1996 general programmes target

EC/1995/SC.2/CRP.19

I. INTRODUCTION

1. An update of UNHCR programme and funding projections for 1995 was presented to the thirty-third meeting of the Sub-Committee on Administrative and Financial Matters of 4 April 1995 (EC/1995/SC.2/CRP.14). The present document provides further updated information on these projections, as well as providing information on the impact of the fall in the value of the US dollar, the proposed transfer of the Education Account into General Programmes, and some tentative estimates for the 1996 General Programmes target.

2. Estimated programme needs and the status of income as at 30 April 1995, including current projections for further income, are summarized in Annex 1. Please note that the format of this annex has been modified to improve the layout, so that there is an overall summary on one page, including information on the United Nations Regular Budget.

II. 1995 GENERAL PROGRAMMES

3. It will be recalled that the Executive Committee, in its meeting of 17 January 1995, approved an increase in the 1995 General Programmes target from $ 415.4 million to $ 428.7 million (A/AC.96/841, para.7). This target includes:

(a) the Emergency Fund ($ 25.0 million), against which allocations totalling $ 11.3 million had been made by 30 April as follows:

• Burundi/Rwanda Emergency: $ 4.0 million for the ongoing emergency in the United Republic of Tanzania and Zaire;

• Guinea: $ 1.4 million for a new influx of refugees from Sierra Leone;

• Uganda: $ 1.5 million for the continuing influx of refugees from the Sudan;

• Russian Federation: $ 2.1 million for displaced persons from Chechnya;

• Emergency Stockpile: $ 2.3 million to establish a stockpile of air-portable staff accommodation and office units for emergency operations in difficult locations. The Emergency Fund will be reimbursed as these units are deployed to specific programmes.

With these allocations, the balance as at 1 May 1995 amounted to $ 13.7 million.

(b) the General Allocation for Voluntary Repatriation ($ 20.0 million), against which allocations totalling $ 9.1 million had been made by 30 April (mainly for repatriations from the Sudan to Eritrea, from Kenya to Somalia, and for spontaneous returnees in Liberia), leaving an unallocated balance of $ 10.9 million as at 1 May 1995.

(c) the Programme Reserve ($ 14.0 million). Of the initial 1995 Programme Reserve of $ 33.7 million approved by the Executive Committee in October 1994, $ 19.7 million were allocated as a result of the comprehensive programme review exercise undertaken in late 1994, leaving a balance of $ 14.0 million for the remainder of 1995 (Annex VII of document EC/1995/SC.2/CRP.6 refers). Further allocations totalling $ 4.9 million (mainly for the Islamic Republic of Iran) have since been made, leaving a balance of $ 9.1 million as at 1 May 1995.

4. Since the approval by the Executive Committee of the revised 1995 General Programmes target, at its 17 January 1995 meeting, the following increased requirements have been identified which UNHCR will seek to meet either through allocations from the Programme Reserve or transfers between appropriations:

(a) Ethiopia: $ 2.1 million for care and maintenance of Somali refugees due both to delayed repatriation to North-West Somalia and to a further influx into Ethiopia;

(b) Sudan: $ 0.6 million on account of needs in Eastern Sudan identified during a recent inter-disciplinary technical mission;

(c) Uganda: some $ 5.0 million will be required for the continuing influx of refugees from the Sudan, but more particularly to allow for the urgent transfer of refugees from transit camps to rural settlements on land provided by the Ugandan Government.

III. IMPACT OF THE FALL IN THE DOLLAR

5. While many UNHCR budgets are prepared in the local currency of expenditure, final budgets are approved in US dollars. Local currency expenditures are converted to US dollars at the prevailing United Nations rate of exchange. Any marked change in the value of the US dollar against the various currencies in which UNHCR operates can therefore have a significant budgetary impact on planned and approved UNHCR activities.

6. To date in 1995, the effects from the declining dollar have been most negative on Headquarters Programme Delivery and Administrative Support budgets and expenditures. These budgets are calculated using an average SwF/$ rate for the year. The initial 1995 budget prepared in May 1994 was calculated at a rate of SwF 1.43 to $ 1. This was revised to SwF 1.32 in the updated budgets presented to the Sub-Committee in January 1995 (Annex V of document EC/1995/SC.2/CRP.6 refers). The United Nations rate of exchange fell from $ 1 to SwF 1.32 in January to $ 1 to SwF 1.14 in May 1995, with the average United Nations exchange rate for the first five months of 1995 having been 1.23.

7. However, since early May the dollar has again risen in value, underscoring the volatility in the foreign exchange markets. Following a review of the exchange rate trends, as well as expenditure data for the first four months of 1995, and taking into account projections made by several large banks, it has been decided to maintain, at this point, the 1995 Headquarters budget calculations at the rate of SwF 1.32 to $ 1. It is planned to continue to monitor the situation carefully over the next few months taking into account actual implementation of approved activities and to report to the Sub-Committee on Administrative and Financial Matters and the Executive Committee in October 1995 on the basis of eight months expenditure and projections for the remainder of the year together with any proposals for adjustments to be considered by the Executive Committee.

8. The impact upon field expenditures is more difficult to gauge. While a number of currencies have remained stable against the US dollar, there are others which have strengthened. In addition, a considerable amount of procurement is undertaken in hard currencies which have appreciated against the US dollar. However, at this stage, and on the assumption that there will be some recovery of the dollar, it is anticipated that the loss in exchange against one group of currencies is likely to be offset by gains against other currencies.

IV. EDUCATION ACCOUNT

9. Proposals to broaden the use of the Education Account were presented to the September 1994 pre-plenary meeting of the Sub-Committee on Administrative and Financial Matters (EC/SC.2/69). Accepted support to tertiary education now focuses on the acquisition of knowledge and vocational skills of direct relevance to the self-sufficiency of the refugee. It thus contributes to the achievement of a durable solution in a country of asylum or to effective and productive reintegration after voluntary repatriation. Such assistance should more logically be funded under General Programmes.

10. It is proposed, through a decision to be taken by the October 1995 session of the Executive Committee, to include retroactively (as of 1 January 1995) the 1995 Education Account budget of some $ 2.5 million into the 1995 General Programmes. At this stage, it is anticipated that these changes can be accommodated within the existing approved target of $ 428.7 million either through allocations from the Programme Reserve or through transfers between appropriations later in the year, after a review of the level of implementation in field programmes.

11. With regard to the 1996 General Programmes target, tertiary education projects are currently being programmed in the field and, following their review, budgetary estimates for inclusion in the 1996 General Programmes target will be submitted to the October 1995 session of the Executive Committee.

V. 1995 SPECIAL PROGRAMMES

12. As regards Special Programmes, projections for 1995 currently amount to $ 849.5 million (Annex 1 also refers). These projections take into account updates under programmes for which funding appeals have been issued in coordination with the Department of Humanitarian Affairs (DHA). A major programme review is currently being undertaken for the Burundi-Rwanda Emergency which is likely to result in further prioritization of activities and programme adjustments. However, for the time being, the same budgetary target has been maintained. In the former Yugoslavia, there has been a reduction of some $19.0 million in 1995 programmed activities on account of the changing situation on the ground and the reduction in UNHCR's ability to deliver relief supplies.

VI. SUMMARY OF OVERALL PROGRAMME AND FUNDING PROJECTIONS FOR 1995

13. As shown in Annex 1, total 1995 projected needs based on currently known or anticipated requirements amount to $ 1,303.3 million. Of this amount, $ 428.7 million concern General Programmes, $ 849.5 million pertain to programmed activities under Special Programmes and $ 25.1 million relate to the Regular Budget. As at 1 May 1995, $ 601.8 million were available (including unobligated funds carried over from 1994) for these programmed activities. Current projections for further income in 1995 are a further $ 511.2 million. Thus, actual and projected availability of funds is $ 1,113.0 million, $ 190.3 million short of projected total needs.

VII. TENTATIVE ESTIMATES FOR 1996 GENERAL PROGRAMMES

14. Within the context of the informal consultations on UNHCR's Budget Structure, a review of Special Programmes has been undertaken to determine their suitability for transfer to General Programmes. This review has focused on the proposed first priority: refugee situations that have stabilized. The following programmes have been identified and are included in the tentative 1996 General Programmes estimate in Annex 2:

• Former Yugoslavia: refugee programmes in Slovenia, The former Yugoslav Republic of Macedonia and related programmes in Germany, Hungary, Turkey, Bulgaria, the Czech Republic and Slovakia amounting to some $ 11.0 million;

• Mexico: longer-term refugee integration programmes amounting to some $ 2.1 million;

• Central Asian Republics: protection-related staff and refugee urban assistance programmes in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan amounting to some $ 2.8 million;

• Headquarters: programme staff related to the above programmes and emergency response staff previously funded under a special trust fund amounting to some $ 3.6 million.

15. In addition to the above, delays in certain repatriation programmes, notably to Ethiopia, Liberia and Somalia, as well as refugee influxes to countries such as Côte d'Ivoire, Ethiopia, Guinea and Uganda have resulted in continuing or increased care and maintenance needs in asylum countries.

16. A key constraint in budgeting accurately for 1996 needs is the difficulty in projecting exchange rates against the US dollar, as described above. The 1996 Headquarters budgets have been calculated at the same rate as the revised 1995 budgets, i.e. SwF 1.32 to $ 1. For 1996, an increase of the Programme Reserve from 10 per cent to 12 per cent of programmed activities will be proposed to the Executive Committee. The additional 2 percent would be used only if required to cover any exchange rate losses, particularly at Headquarters.

17. A tentative budget estimate for the 1996 General Programmes target has therefore been calculated at some $ 445.3 million and is attached as Annex 2. Detailed budgetary information will be presented to the forty-sixth session of the Executive Committee.