Assembly adopts $1.77 billion budget for 1988-89; may reconvene to discuss money crunch; UN could be 'insolvent' by mid-1988, Secretary-General warns.

• Position: Javier Perez de Cuellar

Assembly adopts $1.77 billion budget for 1988-89; may reconvene to discuss money crunch

UN could be 'insolvent' by mid-1988, Secretary-General warns

At 3:55 a.m. on 20 December, after a siege-like final session lasting eight hours, a weary Fifth Committee recommended a budget of $1.77 billion for 1988-1989. The next day, the General Assembly adopted it by a vote of 146 in favor to 1 against (Israel) and three abstentions (Australia, Japan, United States). The Assembly also recommended that it consider reconvening sometime in 1988 to address the Organization's continuing financial crisis, which Secretary-General Javier Perez de Cuellar called "unprecedented" in its seriousness.

The UN, he warned, could become insolvent in the third quarter of 1988, the "simple but harsh" message of projections in his financial report. He was considering private borrowing and some other measures to enable the Organization to survive in 1988.

The world body, in expressing concern over the continuing crisis, called on States to pay in full and on time, even early when possible. The short-term deficit was expected to exceed $350 million as at 31 December 1987, it noted. Delays and partial payments of assessed contributions created "serious cash-flow problems." The Assembly reaffirmed its commitment to a "comprehensive and generally acceptable solution", based on the principle of collective financial responsibility of Member States.

The Assembly linked the financial crisis with the process set in motion in 1985 with the creation of an 18-member expert group to streamline the Organization. "In order to carry out successfully the process of reform and restructuring, it is essential that the present financial uncertainties be dispelled", it stipulated.

The immediate cause of the financial crisis was "common to all", the Secretary-General told the Fifth Committee -- the failure of many Governments to pay their assessed contributions in a timely manner, aggravated by serious currency instability.

Never had so many organizations of the system "been afflicted simultaneously by such large deficits in the funding of their mandated programmes".

Already, there had been "damaging cutbacks in ... critical areas" -- health, community water supply and sanitation, disease control, industrial development, civil aviation and telecommunications. Priority areas -- humanitarian and technical assistance, and consultancy services for least developed countries -- were severely affected.

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