restricted general agreement on spec(86)6/rev.l … · spec(86)6/rev.l page 2 6. the working...
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GENERAL AGREEMENT ON
TARIFFS AND TRADE
WORKING CAPITAL FUND
Note by the Director-General
Revision
1. Oustanding contributions have reached a considerable amount: at 31 December 1985 they totalled Sw F 11,514,000, and a further increase brought them to Sw F 17,203,000 at 31 December 1986. It has to be recognized, therefore, that the pleas reiterated each year to countries in arrears by the Council, on a proposal by the Committee on Budget, Finance and Administration, have been unavailing. However, it is to be noted that more than half of this steep increase is due to the fact that a major contributor had paid only two third of its 1986 contribution at 31 December 1986.
2. It should be mentioned, however, by way of example, that arrangements have been made with four countries (the central African Republic, Chad, Haiti and Nicaragua) for instalment payments which should allow their situation to revert to normal in a few years1 time. One of these countries, Haiti, has been making payments on a regular basis with a view to settle its arrears.
3. At 31 December 1986, total contribution arrears appear to have been some Sw F 5,7 million above their level one year earlier. At the end of the budget year, economies in the vicinity of Sw F 4,5 million were recorded, miscellaneous income exceeded the estimates by nearly Sw F 475,000 and a net amount of some Sw F 200,000 in contributions was assessed on contracting parties subsequent to the adoption of the the 1986 scale of contributions, leading to a gross negative result of some Sw F 500,000. Therefore, taking into account an amount of some Sw F 1,8 million which had to be reimbursed to the Working Capital Fund, the total deficit at 31 December 1986 was Sw F 2,3 million. It was possible to cover this deficit entirely by a transfer from the Working Capital Fund. It is clear, however, that the substantial economies which made this result possible were largely attributable to circumstances beyond the secretariat's control (decline of the dollar in relation to the Swiss franc, failure of Remuneration Correction Factor to fulfill its stabilizing role, etc.). If that had not been the case, the size of the Working Capital Fund would, again in 1986, have been quite inadequate.
4. An increase in the level of the Working Capital Fund seems essential if one is to avoid having recourse to bank overdrafts in order to cover, at certain difficult moments, particularly at year's end, current expenditure that cannot be postponed.
5. In 1984, the Director-General found himself obliged to seek authorization for a bank overdraft in order to cover current expenditure that could not be postponed. While in the event that authorization did not have to be used, it was because some countries had paid their contributions in advance, i.e. GATT received their contributions for 1985 in December 1984. At 31 December 1986, a similar result was achieved because of budget surpluses and by differing some payments which could be postponed.
RESTRICTED
Spec(86)6/Rev.l 23 March 1987
87-0433
Spec(86)6/Rev.l Page 2
6. The Working Capital Fund was set up by the CONTRACTING PARTIES in 1956 at the level of US$190,000 (approximately Sw F 722,000 at the exchange rate in force when GATT converted its dollar accounts into Swiss francs). At 1 January 1987 the Fund was at the level of Sw F 3,224,561 as a result of:
(i) transfer from a Repatriation Fund of the equivalent of Sw F 95,000 in 1960;
(ii) additional advances requested from member governments in 1965, totalling Sw F 328,000;
(iii) sums requested from new contracting parties -Sw F 377,450;
(iv) transfer of Sw F 1,061,721 from the surplus account;
(v) interest credited in 1982, 1983, 1984, 1985 and 1986 -Sw F 593,971.
7. In 1956, Sw F 722,000 corresponded to 42 per cent of the GATT budget, i.e. equivalent to five months' current secretariat expenditure. Today, Sw F 3,224,561 represent only 5 per cent of the 1987 budget, i.e. only eighteen days of GATT operations.
Recommendations
8. The Director-General recommends that the Working Capital Fund be set and maintained at a level sufficient to guarantee the organization's financial stability. Clearly, that guarantee no longer exists at the present time and, since substantial contributions are paid late, the secretariat is faced with very serious cash availability problems.
9. Accordingly, the Director-General proposes that the amount of the Working Capital Fund be raised to around 10 per cent of the GATT budget, i.e. Sw F 6 million - slightly more than one month's financing of secretariat activities.
Swiss francs Amount of the Fund at 1.1.1987 3,224,561 Proposed new amount of the Fund 6,000,000
This represents an increase by Sw F 2,775,439.
10. The new assessment scale for advances to the Working Capital Fund and the corresponding additional payments are shown in Annex I. The increase would be matched by three yearly instalments included in 1988, 1989 and 1990 budget estimates. The 1988 appropriation would amount to Sw F 1,000,000.
Annex I : New assessment scale for advances to the Working Capital Fund by contracting parties
Annex II : Rules governing the use of the Working Capital Fund
Annex III : Contribution arrears at year-end for ten past years compared with principal of Working Capital Fund
Annex IV : Size of the Working Capital Fund of other organizations
Annexe I
Nouvelle répartition du Fonds de Roulement
1.
2.
3.
4.
New amount of Fund
Credit with organization:
- transfer from Repatriation Fund (1960) - transfer from surplus account - interest, 1982 to 1985
Fr.s. Fr.s. Fr.s.
Fr.s. 6,000,000
95,000 1,061,721 593,971
1,649,171 Total new assessment
Additional advances requested (minimum contributions 0,5 per cent):
(1,750,692) 4,249,308
Contracting parties/Parties contractantes/ Partes contratantes:
percentage share
New amount of advances
Present amount of advances
Credits resulting from revised
assessment in 1965
Additional advances requested
Argentina/Argentine Australia/Australie Austria/Autriche Bangladesh Barbados/Barbade Belgium/Belgique/Bélgica Belize/Belice Benin/Benin Brazil/Brésil/Brasil Burkina Faso Burma/Birmanie/Birmania Burundi Cameroon/Cameroun/Camerûn Canada/Canada Central African Republic/République centrafricaine/Repûblica Centroafricana
Chad/Tchad
0.50 1.08 0.83 0.50 0.50 2.29 0.50 0.50 0.98 0.50 0.50 0.50 0.50 3.72
0.50 0.50
21,247 45,892 35,268 21,247 21,247 97,308 21,247 21,247 41,642 21,247 21,247 21,247 21,247 158,073
21,247 21,247
9,682 21,983 11,932 6,940 6,718 36,499 13,390 6,175 10,823 6,175 6,175 6,175 6,175 54,447
6,175 6,175
2,492
13,652
11,565 21,417 23,336 14,307 14,529 60,809
7,857 15,072 17,167 15,072 15,072 15,072 Taw 15,072 &"%
103,626 *2s woo
ON 15,072 15,072
o>
!» <
Contracting parties/Parties contractantes/ percentage Partes contratantes; share
Chile/Chili 0.50 Colombia/Colombie 0.50 Congo, People's Republic/Congo, République populaire/Congo, Repûblica Popular . . . . 0.50
Côte d'Ivoire 0.50 Cuba 0.50 Cyprus/Chypre/Chipre 0.50 Czechoslovakia/Tchécoslovaquie/Checoslovaquia . 0.82 Denmark/Danemark/Dinamarca 0.78 Dominican Republic/République Dominicaine/ Repûblica Dominicana 0.50
Egypt, Arab Republic/Egypte, République arabe/ Egipto, Repûblica Arabe 0.50
Finland/Finlande/Finlandia 0.60 France/Francia A. 80 Gabon/Gabon 0.50 Gambia/Gambie 0.50 Germany, Federal Republic/Allemagne, République fédérale/Alemania, Repûblica Federal . . . 7.61
Ghana 0.50 Greece/Grèce/Grecia 0.50 Guyana/Guyane 0.50 Haiti/Haïti/Haiti 0.50 Hong Kong 1.25 Hungary/Hongrie/Hungria 0.50 Iceland/Islande/Islandia 0.50 India/Inde 0.55 Indonesia/Indonésie 0.87 Ireland/Irlande/Irlanda 0.50 Israël/Israël 0.50 Italy/Italie/Italia 3.70 Jamaica/Jamaïque 0.50 Japan/Japon/Japon 6.82
va Credits resulting Additional n> o
New amount Present amount from revised advances ->oo of advances of advances assessment in 1965 requested **>
so
21,247 21,247
21,247 21,247 21,247 21,247 34,843 33,144
21,247
21,247 25,495 203,966 21,247 21,247
323,371 21,247 21,247 21,247 21,247 53,115 21,247 21,247 23,370 36,968 21,247 21,247 157,223 21,247 289,802
6,175 7,120
6,175 6,175
15,072 14,127
15,072 15,072
6,175 6,063 9,009 6,175 18,977 16,526
6,175
6,175 9,785 68,480 6,175 6,175
109,877 6,175 6,175 6,684 6,175 46,300 12,000 6,175
15,072 15,866 16,618
15,072
15,072 15,710 135,486 15,072 15,072
213,494 15,072 15,072 14,563 15,072 6,815 9,247 15,072
15,763 8,712 (1,105) 6,175 6,920 6,175 47,819 6,175 48,842
30,793 14,327 15,072 109,404 15,072 240,960
Contracting partles/Partles contractantes/ percentage Partes contratantes; share
Kenya 0.50 Korea, Republic/Corée, République/ Corea, Repûblica 1.32
Kuwait/Koweït 0.50 Luxembourg/Luxemburgo 0.50 Madagascar 0.50 Malawi 0.50 Malaysia/Malaisie/Malasia 0.63 Maldives/Maldivas 0.50 Malta/Malte 0.50 Mauritania/Mauritanie 0.50 Mauritius/Maurice/Mauricio 0.50 Mexico 0.78 Morocco/Maroc/Marruecos 0.50 Netherlands, Kingdom of/Pays Bas, Royaume des/ Paises Bajos, Reino de los 3.20
New Zealand/Nouvelle-Zélande/Nueva Zelandia . 0.50 Nicaragua 0.50 Niger/Niger 0.50 Nigeria/Nigeria 0.70 Norway/Norvège/Noruega 0.77 Pakistan/Pakistan 0.50 Peru/Pérou/Perû 0.50 Philippines/Filipinas 0.50 Poland/Pologne/Polonia 0.53 Portugal 0.50 Romania/Roumanie/Rumania 0.50 Rwanda 0.50 Senegal/Senegal 0.50 Sierra Leone/Sierra Leona 0.50 Singapore/Singapour/Singapur 0.83
Amount to be assessed upon accession in 1987.
Credits resulting Additional New amount Present amount from revised advances of advances of advances assessment in 1965 requested
21,247
56,090 21,247 21,247 21,247 21,247 26,770 21,247 21,247 21,247 21,247 33,144 21,247
135,977 21,247 21,247 21,247 29,744 32,719 21,247 21,247 21,247 22,520 21,247 21,247 21,247 21,247 21,247 35,269
6,175
6,749 6,175 6,175 6,175 6,175 8,288 13,390 6,175 6,175 6,817 32,450. 16,120^
50,179 7,060 6,175 6,175 6,175 11,510 6,175 6,175 7,025 15,587 6,969 10,469 6,650 6,175 6,175 10,180
5,177
727
15,072
49,341 15,072 15,072 15,072 15,072 18,482 7,857 15,072 15,072 14,430
694 5,127
85,798 9,010 15,072 15,072 23,569 20,482 15,072 15,072 14,222 6,933
14,278 10,778 14,597 15,072 _ 15,072 S?f 25,089 «•£
moo
Contracting parties/Parties contractantes/ percentage Partes contratantes: share
South Africa/Afrique du Sud/Sudâfrica . . . 0.74 Spain/Espagne/Espana 1.20 Sri Lanka 0.50 Suriname 0.50 Sweden/Suède/Suecia 1.29 Switzerland/Suisse/Suiza 1.29 Tanzania/Tanzanie/Tanzania 0.50 Thailand/Thaïlande/Tailandia 0.50 Togo 0.50 Trinidad and Tobago/Trinité-et-Tobago/ Trinidad y Tabago 0.50 Turkey/Turquie/Turquia 0.50 Uganda/Ouganda 0.50 United Kingdom of Great Britain and Northern
Ireland/Royaume-Uni de Grande-Bretagne et d'Irlande du Nord/Reino Unido de Gran Bretana e Irlanda del Norte 4.64
United States of America/Etats-Unis d'Amérique/ Estados Unidos de America 12.36
Uruguay 0.50 Yugoslavia/Yougoslavie 0.52 Zaire/Zaïre 0.50 Zambia/Zambie 0.50 Zimbabwe 0.50 Kampuchea 0.50 Tunisia 0.50
100.00
i
TJ C/5
Credits resulting Additional S ô New amount Present amount from revised advances ONOO of advances of advances assessment in 1965 requested S
ON
31,444 50,991 21,247 21,247 54,815 54,815 21,247 21,247 21,247
21,247 21,247 21,247
13,121 10,735 6,175 7,155 26,376 22,439 6,175 12,560 6,175
6,175 6,175 6,175
11,353 6,970 40,256 15,072 14,092 28,439 32,376 15,072 8,687 15,072
15,072 15,072 15,072
197,167
525,213 21,247 22,095 21,247 21,247 21,247 21,247 21,247
4,249,308
116,003
167,702 6,175 7,372 6,851 12,500 6,175 6,175 6,175
1,489,989
6,
54,
,370
,546
74,794
357,511 15,072 14,723 14,396 8,747 15,072 15,072 15,072
2,704,773
. >
Spec(86)6/Rev.l Page 7
ANNEX II
Rules Governing the Use of the Working Capital Fund
(i) The Working Capital Fund created by Resolution of 17 November 1956 shall be of such amount as may be voted from time to time by the CONTRACTING PARTIES and shall be constituted by:
(a) advances made by contracting parties. Such sums shall be carried to the credit of the contracting parties which have paid them;
(b) any sums which the CONTRACTING PARTIES may cause to be paid into it from time to time. Such sums shall be carried to the credit of the organization.
(ii) Any government acceding to the General Agreement shall make an advance to the Fund in accordance with the scale of contributions applicable to the budget for the year of its accession. The minimum advance to the Working Capital Fund amounts to 0.5 per cent of the principal of the Fund for countries whose share of the total trade of contracting parties and associated governments is 0.5 per cent or less.
(iii) The Director-General is authorized to advance from the Working Capital Fund:
(a) such sums as may be necessary to finance budgetary appropriations pending receipt of contributions;
(b) in exceptional circumstances and subject to prior authorization of the CONTRACTING PARTIES, such sums as may be necessary to finance commitments relating to extraordinary expenditure.
(iv) Sums advanced under (iii) (a) above shall be reimbursed to the Working Capital Fund as soon as receipts from contributions are available for the purpose. Sums advanced under (iii) (b) above shall be reimbursed to the Working Capital Fund by including an appropriate credit in the budget. Advances made from the Fund during the first six months of the year shall be reimbursed in the first year succeeding that in which the advances were made. Sums advanced during the second six months of the year shall be reimubursed in the second year succeeding that in which the advances were made.
(v) The CONTRACTING PARTIES may liberate all or part of the sums constituting the Working Capital Fund, and the sums so liberated in so far as they are derived from monies placed in the Fund under paragraph (i) (a) shall be returned in Swiss francs to the contracting parties which have contributed to the Fund in proportion to their respective shares in the Fund.
Spec(86)6/Rev.l Page 8
(vi) Subject to a decision of the CONTRACTING PARTIES, countries which for any reason cease to be contracting parties of the GATT shall be entitled to the reimbursement of the total Swiss franc amount of their shares in the Working Capital Fund under paragraph (i) (a).
(vii) Interest accrued on the Working Capital Fund shall be added to the Working Capital Fund and carried to the credit of the organization under Rule (i) (b) above.
Spec(86)6/Rev.l Page 9
ANNEX III
Contribution arrears for ten past years, compared with Working Capital Fund.
(Swiss francs)
Total of year-end
contr ibut ions arrears
Contribution arrears for budget
year
Principal of Working Capital Fund
(1) (2) (3) (4)
31.12.1975 31.12.1976 31.12.1977 31.12.1978 31.12.1979 31.12.1980 31.12.1981 31.12.1982 31.12.1983 31.12.1984 31.12.1985 31.12.1986
2,279,197 3,428,332 3,333,375 4,640,843 4,684,183 4,500,167 6,008,921 6,442,106 7,971,931 9,629,686 11,513,746 17,202,996
689,101 1,149,135
-1,307,468
43,340 -
1,508,754 433,185
1,529,825 1,657,755 3,760,039 7,738,466
1,431,124 1,431,124 1,431,124 1,438,279 1,438,279 1,438,279 2,500,000 2,677,637 2,831,003 2,925,531 3,044,290 3,224,561
Spec(86)6/Rev.l Page 10
ANNEX IV
Working Capital Fund of Other Organizations
The table below shows the amounts of the Working Capital Fund of other organizations in relation to their respective budgets.
($1.000) 1985 gross Gross budget budget or estimate Working Percentage of
or budget for financial Capital column (3) Organization estimate period Fund to column (1)
(1) (2) (3) (4)
ILO FAO UNESCO ICAO WHO WMO IMO WIPO IAEA United Nations d/
127 236 187 36 290 22 13 20 95
793
359 700 205 917 870 379 178 001 025
580
254 719 472 140 374 410 111 219 581 740 89 938 25 772 40 001
-
1 587 160
21 13 20 2 11 2 1 1 2
100
152 a/ 250 000 500 b/ 133 500 000 880 c/ 000
000
16.6 5.6 10.7 6.8 3.8 11.2 7.6 9.4 2.1
12.6
a/ Estimated balance in the Fund on 31 December 1984. b/ Preliminary, proposed or subject to further review, ç/ As at 31 December 1983. d/ Programme budget.