Development account to be created.

• Position: UN

The Organization's cash position is "weak, and getting weaker, with unpaid assessments decreasing slowly", Secretary-General Kofi Annan stated on 12 March. Debt to Member States had become "resistant to change" and, as a result, the "need to cross-borrow from peacekeeping funds to cover regular budget deficits persists, as the level of funds decline".

By 31 January 1997, regular budget assessments had been paid in full by 29 Member States, "while only 24 Member States had paid in flail by January 1998", the Secretary-General reported. He noted with disappointment that some Member States that had been on the "payments received" list in 1997 were not there in 1998. As a consequence, the normal surge of cash inflows traditionally expected at the beginning of each year had not materialized for 1998, and total receipts for the two months were down from $556 million in 1997 to $317 million - a 43 per cent drop, the report said.

While the Secretary-General was "most appreciative" of the efforts made by Member States that had paid in flail and on time, he asked all others to make "prompt payments of amounts now past due".

On 22 April, Fred Eckhard, Spokesman for the Secretary-General, announced that the regular budget outstanding assessments, together with assessments for peacekeeping and the International Criminal Tribunals, totalled about $2.64 billion. At the same time last year, the total was $2.7 billion, so there had been a "marginal improvement", he added.

On 2 April, the Secretary-General reported that the underlying assumption in the creation of a Development Account - which the General Assembly, by resolution 52/12 B of 19 December 1997, decided to establish in the programme budget for the biennium 19981999 - is that any gains achieved as a result of productivity improvements, such as streamlining and simplification of processes and procedures, would become a permanent component of the Account.

"Accordingly, once a productivity gain has been identified and achieved, approval by the General Assembly will be sought for the transfer of the associated resources in that Account under section 34, Development Account, of the programme budget. It would thus reflect a redeployment of productivity gains in the administrative areas to the Development Account. Over time, additional funds will be transferred from productivity gains...