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PERMANENT COUNCIL
OEA/Ser.G
CP/INF.5024/04
25 June 2004
Original: Spanish
FINANCIAL CRISIS IN THE GENERAL
SECRETARIAT:
STATUS OF THE REGULAR FUND
(Presented by the General Secretariat)
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June 24, 2004
His Excellency
Ambassador Miguel Ruíz-Cabañas
Permanent Representative of Mexico to the
Organization of American States
Chair of the Permanent Council
Washington, D. C.
Excellency:
I have the honor to
address Your Excellency and, through you, the Permanent Council on an
urgent matter regarding the status of cash in the Regular Fund.
Articles 98.b and 108 of
Chapter VII of the General Standards to Govern the Operations of the
General Secretariat provide criteria for expending/disbursing cash in the
Regular Fund. Article 98.b requires the Secretary General to ensure that
expenditures during a year do not exceed the income during the year and
other available resources. And, Article 108 directs that, pending receipt
of anticipated income [principally quota payments] into the Regular Fund,
expenditures shall be met with resources [cash] from its Reserve Subfund.
At the beginning of the
current fiscal year (Jan. 1, 2004), the Reserve Subfund of the Regular Fund
held approximately $17.7 million in cash. On January 1, 2004, the member
states owed, in accordance with Article 106 of the General Standards, $73.7
million in quotas. To date, quota payments have been only $26.9 million,
which is less than the amount assessed and less than the amounts projected
by way of payment plans presented by member states. In any case these
payments of $26.9 million together with cash in the Reserve Subfund
provided total Regular Fund cash resources of approximately $44.6 million.
Regular Fund expenditures/disbursements to date, obligated in accordance
with the approved budget, is just under $44.6 million, and projected
disbursements to 5 July 2004 will bring the total to approximately $44.6
million. Or, in other words, the Regular Fund, unless additional quota
payments or other income is received in the next few days, is projected to
be out of cash on or about 5 July 2004. (See summary charts at Attachment
1.)
This situation, of delays
in receiving quota payments resulting in cash difficulties, has occurred
several times in the past eight years. During those occasions I proposed,
formally and informally, borrowing funds from a commercial bank and/or the
Voluntary Fund. These suggestions were not acted upon, and at the last
minute one or more member states made immediate payments on their quota
obligations, which alleviated the immediacy of the cash problem. This same
action by member states of meeting quota obligations with immediate
payments is needed now.
In this context, I must
remind member states that the General Secretariat cannot meet its financial
obligations without cash. Accordingly, I have directed the Secretary for
Management to stop, pending receipt of additional cash, all disbursements
from the Regular Fund. This will include payment to suppliers, contractors,
and fellowships as well as salary payments and related cash benefits.
Suppliers, contractors, and staff may wish to voluntarily continue to
provide goods and services with the understanding that payment will be made
when cash is restored.
At the same time that I
bring the cash situation of the Regular Fund to Your Excellency's
attention, I wish to assure you and the member states that cash in
Specific, Voluntary, and Trust Funds is not at all affected by the cash
situation in the Regular Fund. Cash in those funds is separately accounted
for and untouched by the Regular Fund. However, I should also point out
that to the degree that Specific, Voluntary, and Trust Fund
projects/activities require Regular Fund support for project execution,
some degradation of project execution is likely to occur.
Accept, Excellency, the
renewed assurance of my highest consideration.
César Gaviria
Secretary General
http://scm.oas.org/pdfs/2004/CP13086e.pdf
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