UNITED NATIONS	HS
	Commission on Human Settlements	Distr. GENERAL HS/C/17/9 15 March 1999 ORIGINAL: ENGLISH

The present document presents the programme budget of the United Nations Habitat and Human Settlements Foundation for the biennium 2000-2001, as called for in the financial rules of the Foundation. The budget is based on estimations of the expected level of voluntary contributions to the general and special purpose funds, as well as the level of expenditures required to supplement the United Nations regular budget resources to implement the Centre's programme and provide the necessary programme support. The financial rules also require that the portion of the proposed programme budget relating to programme support costs be submitted to the Advisory Committee on Administrative and Budgetary Questions (ACABQ) for examination and comment. The report of ACABQ relative to the Foundation budget is before the Commission in the annex to document HS/C/17/9/Add.1.

The Executive Director recommends that the Commission approve the programme budget for the United Nations Habitat and Human Settlements Foundation for the biennium 2000-2001, as proposed herein.

1. The proposed budget for the biennium 2000-2001 for the Foundation amounts to $23,019,600. This compares to the proposed final budget for the biennium 1998-1999 of $22,808,300 and the approved initial budget for 1998-1999 of $20,915,400. The Foundation represents approximately 29.6 per cent of the resources available to UNCHS (Habitat), the balance of 70.4 per cent being provided from the regular budget of the United Nations and from technical cooperation trust funds.

2. The budget proposals reflect an organization in transition. The decline in donor confidence during the period 1996-1997 has been reversed. There is a renewed confidence in the redirected programme and the management of UNCHS (Habitat). It proved possible to avert the threat of major programme cutbacks, which appeared necessary in mid-1998. In fact, the final budget for 1998-1999 reflects some increases over the initial estimates. Moreover, the return of donor confidence is marked by a decrease in the relative proportion of earmarked contributions anticipated for the biennium 2000-2001. This turn-around has been made possible through a number of actions and initiatives, including follow-up to the four-nation study on the assessment of UNCHS (Habitat), issued in document HS/C/16/CRP.7, the report of the Office of Internal Oversight Services (OIOS) on the management of the organization, issued in document A/51/884, and the work of the revitalization team instituted by the acting Executive Director in the second half of 1998.
 

3. The final budget for 1998-1999 of $22,808,300 reflects a volume increase of $1,892,900, as compared to the initial budget of $20,915,400 for 1998-1999, and reflects the major adjustments described below.
 

4. The total constituted by general purpose funds in the final budget for 1998-1999 is estimated at $5,610,300, as compared to $7,330,000 in the initial estimates for 1998-1999 (table 5).

(a) Programme budget

5. The revised programme budget for 1998-1999 amounted to $3,406,900 as compared to $5,741,000 in the initial estimates for 1998-1999. The decrease of $2,334,100 is mainly due to a decrease in posts ($580,800), consultants ($50,000), general operating expenses ($150,000), supplies and materials ($100,000) and project activities ($1,453,300).

(b) Management and administration

6. The revised management and administration budget for 1998-1999 amounted to $2,203,400, as compared to $1,589,000 in the initial estimates for 1998-1999. There is an increase of $614,400, due to an increase in posts ($464,400), general operating expenditures ($100,000) and supplies and materials ($50,000). The revised management and administration budget for 1998-1999 includes staff and non-staff costs associated with information offices, which were shown under programme costs in the initial budget estimates for 1998-1999. It may also be noted that all general operating expenditures shown under programme costs in the initial budget for 1998-1999 are now shown under management and administration for the 1998-1999 final estimates.
 
 

(a) Programme budget

7. The total constituted by special purpose funds in the final budget of 1998-1999 for is estimated at $15,400,000, as compared to $13,585,400 in the initial budget estimates for 1998-1999. The increase of $1,814,600 is due to an increase in special purpose projects.

(b) Programme support

8. An amount of $1,548,000 is budgeted for 1998-1999 for programme support costs.

(c) Management and administration

9. An amount of $250,000 is budgeted for 1998-1999 for administrative support for the United Nations Office at Nairobi.
 
 

10. The initial budget for 2000-2001 of $23,019,600, as compared to $22,808,300 for the final revised budget for 1998-1999, represents an increase of $211,300 and reflects the adjustments described below.
 
 

11. The estimated total constituted by general purpose funds in the budget for 2000-2001 is $8,349,600, as compared to $5,610,300 in the revised 1998-1999 budget, representing an increase of $2,739,300. The increase includes a volume change of $2,127,000 and a cost change of $612,300. The volume increase of $2,127,000 reflects the following major changes:

(a) Unfreezing of posts: $1,124,000;

(b) Project costs: $1,000,000.

12. The programme budget for 2000-2001 is estimated at $6,011,100, as compared to $3,406,900 in the revised budget for 1998-1999, representing an increase of $2,604,200. The increase includes a volume change of $2,149,000 and a cost increase of $455,200.

(b) Management and administration

13. The management and administration budget for 2000-2001 is estimated at $2,338,500, as compared to $2,203,400 in the revised budget for 1998-1999, representing an increase of $135,100. The increase includes a decrease of $22,000 in volume change and cost increase of $157,100. Within this budget, an amount of $400,000 is budgeted for the United Nations Office at Nairobi, as compared to $300,000 in the 1998-1999 budget.
 
 

14. The estimated total constituted by special purpose funds in the budget for 2000-2001 is $14,670,000, as compared to $17,198,000 in the revised budget for 1998-1999, representing a decrease of $2,528,000. The special-purpose-funded project of $7,893,484, funded by the Danish International Development Agency (DANIDA) for 1998-1999, will be concluded by the end of 1999. The core activities will be continued through new earmarked funding arrangements.

(a) Programme budget

15. The programme budget for 2000-2001 is estimated at $13,100,000, as compared to $15,400,000 in the final revised budget for 1998-1999. The decrease is due to the conclusion of projects funded from special purpose funds in 1999 (table 9).

(b) Programme support

16. An amount of $1,234,000 is budgeted for 2000-2001, as compared to $1,548,000 in the final revised budget for 1998-1999. The decrease of $314,000 is attributed mainly to a reduction in travel and general operating expenditure.

(c) Management and administration

17. An amount of $336,000 is budgeted for management and administration for 2000-2001, as compared to $250,000 in the final revised budget for 1998-1999. The increase of $86,000 is attributed to the streamlining of administrative arrangements with the United Nations Office at Nairobi.

18. A summary of the budget proposals is provided in table 1. The proposals are fully supported by the financial situation presented in chapter I of the present report. Total income in 2000-2001 is estimated at $20,200,000, as compared to $24,056,000 in the revised 1998-1999 budget, representing a decrease of $3,856,000, or 16.0 per cent (table 3). There is, however, an increase in general purpose expenditure in 2000-2001 as compared to 1998-1999, of 48.8 per cent, whereas the special purpose expenditure is estimated to decrease by 14.7 per cent (table 2).

19. The proposed budget has been prepared in accordance with a new format utilizing the harmonized budget model as applied by the United Nations Development Programme (UNDP), the United Nations Population Fund (UNFPA), the United Nations Children's Fund (UNICEF) and the United Nations International Drug Control Programme (UNDCP). Details of the harmonized budget methodology are provided in annex IV to the present report. The following presentation starts with a detailed discussion of the financial situation, contained in chapter I. Chapter II presents the budget proposal for 1998-1999 and chapter III the proposal for 2000-2001. Also included are a number of annexes, including the response to previous observations by ACABQ, the status of the implementation of recommendations from the Board of Auditors and a list of pledges for 1998.
 
 

20. Overall income for the biennium 2000-2001 is estimated at $20,200,000, as compared to the estimate of $24,056,000 for 1998-1999. The actual income for 1996-1997 was $16,573,468. Expenditure for 2000-2001 is estimated at $23,019,600 as compared to an estimate of $22,808,300 for 1998-1999. The actual expenditure for 1996-1997 was $16,093,977. The Fund balance, as shown in table 4, is expected to decline from $5,640,500 as of 31 December 1999 to $819,800 as of 31 December 2001. The financial reserve is maintained at $1,002,663.

21. The Foundation distinguishes between general purpose (voluntary contributions/non-earmarked) resources and special-purpose (earmarked) resources. General purpose income for 2000-2001 is estimated at $8,900,000, as compared to an estimate of $7,236,000 for 1998-1999. Special purpose income for 2000-2001 is estimated at $11,300,000, as compared to estimates of $16,820,000 for 1998-1999. The general purpose fund balance is estimated to decline from $2,132,800, as of 31 December 1999, to $642,100, as of 31 December 2001. The special purpose fund balance is estimated to decline from $3,507,700, as of 31 December 1999, to $177,700, as of 31 December 2001, as shown in table 4.

22. Sufficient resources are anticipated to fund the budget for the biennium 2000-2001, based on the estimated increased income for the years 2000-2001 and the reduction of the fund balance to a level considered appropriate for the operation of the Foundation. It is assumed that income will continue to increase, consolidating the positive developments and results achieved during 1999. It is believed that 1999 will herald a turn-around in the financial situation. For 1996-1997, the voluntary contributions to the general purpose fund amounted to $5,415,455, whereas, for the biennium 1998-1999, these are anticipated to total $6,386,000, representing an increase of 17.0 per cent. In addition, the following developments took place in the Centre, which helped significantly in improving donor confidence:

    (a) Based on the four-nation study on the assessment of the organization and management of UNCHS (Habitat) (HS/C/16/CRP.7), which was sponsored by Denmark, the Netherlands, South Africa and Uganda, and on the report of OIOS on the review of the programme and administrative practices of the Centre (A/51/884), the Executive Director established a "revitalization team" with financial support from West European Member States, with a view to energizing the Centre;

    (b) The Secretary-General submitted a report on the assessment of UNCHS (Habitat) (A/53/512) to the General Assembly at its fifty-third session, which was duly taken note of by the Assembly;

    (c) The revitalization team carried out its work with the full involvement of the staff of the Centre and in consultation with the Committee of Permanent Representatives based in Nairobi. The team produced a number of reports, including a new strategic vision for the Centre, resulting in a more focused work programme for the biennium 2000-2001, based on the Habitat Agenda;

    (d) At its fifty-third session, the General Assembly adopted resolution 53/180 of 15 December 1998, entitled "Special session of the General Assembly for an overall review and appraisal of the implementation of the Habitat Agenda", in which it, inter alia, designated the Commission on Human Settlements as the preparatory committee for the special session;

    (e) As part of the programme for reform of the United Nations, the Secretary-General established a Task Force on Environment and Human Settlements. The subsequent report of the Task Force (A/53/463) was submitted to the General Assembly, which welcomed the recommendations contained therein;

    (f) The Executive Director brought these developments to the attention of the donor Governments, thereby significantly boosting the confidence of the Member States in the Centre.

23. On the basis of the above-mentioned developments and the initiatives taken by the Executive Director, it is anticipated that new funding will be provided by the donor community. The financial scenario for 2000-2001 includes the best estimates which are required to fulfil the obligations resulting from the new strategic vision for the Centre and the preparatory process of the special session of the General Assembly to be held in the year 2001. In the final analysis, the income estimates provide a challenge to be met by the donor community, which could put the financial situation of the Foundation on a more stable, sustainable and predictable basis. Key to achieving this objective is an increase in the share of general-purpose resources, a widening of the donor base, the honouring and early payment of pledges and longer-term commitments by donors, including multi-year pledges. Table 3 indicates income estimates for the period 2000-2001, as compared to revised estimates for 1998-1999. Table 4 presents the financial reserve and fund balance for 2000-2001 and 1998-1999.
 
 

24. Income is estimated at $20,200,000 for 2000-2001, as compared to the estimate of $24,056,000 for 1998-1999. There is a decrease of $3,856,000 or 16.0 per cent. Actual income for 1996-1997 amounted to $16,573,468. The decrease in income from 1998-1999 to the 2000-2001 is attributed to a decrease in special purpose resources. For the 1998-1999 biennium, the special purpose resources are estimated at $16,820,000, whereas for the 2000-2001 biennium, they are estimated at $11,300,000. This is due to the phasing out of the special-purpose-funded project by DANIDA, which is scheduled for completion by the end of 1999. It should, however, be noted that the budget estimates for general purpose funds for 2000-2001 amounts to $8,349,600 as compared with the revised budget estimates of general purpose funds for 1998-1999 of $5,610,300, an increase of $2,739,300.
 
 

25. Final estimates amount to $23,206,000, as compared to initial estimates of $20,670,000, reflecting an increase of $2,536,000 or 12.3 per cent. Actual contributions for 1996-1997 amounted to $13,730,720. The final estimates include general-purpose contributions of $6,386,000 and special purpose contribution of $16,820,000. For 1998, actual income realized amounts to $12,343,108, with $3,559,680 as general purpose resources and $8,783,428 as special purpose resources. A detailed listing of pledges is provided in annex IV to the present report. For 1999, income estimates amount to $10,862,746, comprising $2,826,174 for general purpose and $8,036,572 for special purpose income.
 
 

26. Contributions are estimated at $19,300,000 for 2000-2001, reflecting a decrease of $3,906,000 or 16.8 per cent, as compared to the revised estimate of $23,206,000 for 1998-1999. For 2000-2001, general purpose contributions are estimated at $8 million representing an increase of $1,614,000 or 25.3 per cent. The special purpose contributions are estimated at $11,300,000 representing a decrease of $5,520,000 or 32.8 per cent. It is difficult to estimate special purpose contributions, as donors usually restrict commitments to a one-year period, which limits the predictability of future income scenarios. The Centre is, however, optimistic that the special purpose contributions for the biennium 2000-2001 will in fact exceed budget estimates. In the absence of prior indications from donors, projects are based on recent history of donor support, the momentum generated by the revitalized Centre and the new initiatives launched by the Executive Director. Notwithstanding this positive assessment, the Foundation remains exposed to the risk of financial volatility and unpredictability. General purpose income declined over the past two bienniums, thus constraining the capacity to fund the Foundation budget and limiting the Centre's flexibility to respond quickly to programme requirements. The donor base is still narrow, with seven countries accounting for approximately 81 per cent of total general purpose income for 1998-1999. A historical summary of general purpose and special purpose contributions is provided in annex V to the present report.
 
 

27. Interest income is estimated at $450,000, for 2000-2001, reflecting an increase of $50,000, as compared to the revised estimate of $400,000 for 1998-1999. Actual interest earned for 1996-1997 amounted to $81,786. Interest income is received from temporary surpluses and operating reserves invested by the Treasury of the United Nations, taking into account the cash-flow requirements of UNCHS (Habitat). Interest income is determined by the interest rates on the United States dollar call accounts and short-term deposits and cash balance maintained by UNON on behalf of UNCHS (Habitat). Interest derived from special purpose contributions is identified separately for the fund balance of each contribution. In the event that donor funding arrangements stipulate that the interest income should be credited to a project, the income is classified as special purpose interest. Whenever interest income is available to the Foundation without restriction, the income is shown as general purpose funds.
 
 

28. Miscellaneous income is estimated at $450,000 for each of the two bienniums 1998-1999 and 2000-2001. These include savings on the cancellation of prior period obligations.
 
 

29. In its report, ACABQ recommended that, in future, the Foundation's budget presentation should clearly establish the expected amount of programme support income available to the Foundation from management fees charged to earmarked projects for programme support. Accordingly, the present budget submission contains detailed information on projected programme support income and expenditures for the bienniums 1998-1999 and 2000-2001.

30. Revised programme support charges are estimated at $1,300,000 for the biennium 2000-2001, reflecting a decrease of $520,000 or 28.6 per cent, as compared with the revised estimate of $1,820,000 for 1998-1999 (table 3). Actual programme support charges for 1996-1997 amounted to $1,700,312. Programme support charges are levied on special-purpose-funded expenditures to secure the funding of technical and administrative back-stopping activities. UNCHS (Habitat) applies a standard rate of 13 per cent for programme support charges.
 
 

31. The operational reserve and fund balance are given in table 4. The financial reserve is maintained at $1,002,663. The fund balance as at 31 December 1999 is estimated at $5,640,500 and is expected to decrease to $819,800 by 31 December 2001. The general purpose fund balance is estimated at $2,132,800 and is expected to decrease to $642,100 by 31 December 2001. The decrease in the general purpose fund balance is due to inter-fund borrowing of $2,041,100 for the second United Nations Conference on Human Settlements (Habitat II). When the internal audit report on Habitat II (A/52/821) was presented to the United Nations General Assembly at its fifty-second session, it was recommended that the Assembly write off this debt as no donors were willing to contribute to the Conference post facto. The special purpose fund balance is estimated at $3,507,700 at 31 December 1999 and is expected to decrease to $177,700 by 31 December 2001.
 
 

32. ACABQ considered the report of the Executive Director on the proposed budget of the United Nations Habitat and Human Settlements Foundation for the biennium 1998-1999 (HS/C/16/12). The Advisory Committee recommended that, before the Commission on Human Settlements, at its sixteenth session, approved the revised resource utilization plan for 1996-1997, expenditure projections should be significantly reduced by the Foundation, in particular those financed from general purpose funds (i.e., programme and programme support costs and support to the United Nations Office at Nairobi). Based on the Committee's recommendation, the Commission on Human Settlements, in decision 16/29 of 7 May 1997, reviewed the budget submission and reduced the expenditure projections for 1998-1999.

33. During early 1998, the Foundation faced a situation of non-payment of pledges and experienced liquidity problems. During that period, the Foundation was not in a position to provide resources for activities related to the approved budget by the Commission on Human Settlements. Member States started honouring their pledges in the first quarter of 1998, slightly improving the financial situation of the Foundation. Subsequent developments, such as the Centre's revitalization and improved donor confidence, resulted in pledges being paid later in the year 1998. These factors helped in providing Foundation resources for implementation of those programme elements of the approved work programme for 1998-1999 which were budgeted under extrabudgetary resources. The budget requirements for 1998-1999 were decreased by cancelling some of the extrabudgetary funded programme outputs of the approved work programme for 1998-1999. The Centre had carefully reviewed the activities of the work programme for 1998-1999, in order to apply savings measures wherever possible, while limiting the impact on priority activities and outputs.

34. During 1998-1999, the following steps were taken:

    (a) Making more targeted use of regular budget funds;

    (b) Optimizing the use of special purpose funds to ensure programme delivery;

    (c) Reducing the number of advisory missions and the amount of travel for consultations with partners and the holding of workshops;

    (d) Reducing the costs of the printing and dissemination of technical publications by using electronic means (i.e., the internet);

    (e) Combining outputs when considered feasible and useful.

35. Through such measures it proved possible to reduce the requirements for funding from extrabudgetary, non-earmarked resources (general purpose resources), without adversely affecting high priority activities of the approved work programme.

36. The above-mentioned measures were applied in accordance with the following principles:

    (a) To achieve a more visible profile of high priority activities for implementing the Habitat Agenda;

    (b) To provide more targeted support to those activities which are key to the Centre's new strategic focus;

    (c) To reduce those activities which have become marginal and less relevant for the Centre's new strategic focus;

    (d) Not to affect the Centre's global programmes and operational activities;

    (e) To streamline the Centre's work on normative and capacity-building activities.
 
 

37. Since the 1980-1981 biennium response to the Commission on Human Settlements resolution 3/8 of 5 May 1980, the activities of the Foundation have been functionally integrated and form part of the work programme on human settlements.

38. The work programme is derived from the Habitat Agenda and the directives and mandates provided by the Commission on Human Settlements and the General Assembly. The work programme is supported by resources from the regular budget and extrabudgetary resources. The Foundation's resources budgeted under the extrabudgetary category complement the regular budget and the work-programme outputs supported by the Foundation are clearly identified in the budget presentation.

39. Within the framework of its mandate as focal point within the United Nations system for implementing the Habitat Agenda, the Centre's work focused on providing policy support and technical assistance to Governments, local authorities, non-governmental organizations and private sector actors to establish strategic and operational partnerships in the substantive areas of, first, adequate shelter and social services; second, urban management; third, urban environment and infrastructure; and, fourth, assessment, monitoring and information on human settlements conditions and trends. These efforts are carried out through a combination of policy advice, research on global human settlements issues, capacity-building at the level of local government (mainly in Asia, Africa, Latin America and countries with economies in transition), and the rendering of technical assistance through field projects and advisory missions in all developing regions.

40. The highlights of the activities and achievements in 1998 are summarized in the subsections which follow.
 
 

41. Under the long-standing cooperation agreement between the Centre and the Government of Denmark, global programmes in the four areas of community development, urban management (environment component), settlement infrastructure and environment, and women in human settlements have been brought closer to their planned completion. This included the preparation of comprehensive documentation on the experiences and lessons learned from implementing the programmes at global, regional and local levels and through an integrated approach of linking research with capacity-building and operational activities. During the period under review, the Community Development Programme also completed cooperation with the Government of the Netherlands on broad-based research into the methodology and results of that programme. The main conclusion of this research was that the Community Development Programme should apply an effective strategy for reducing the level of poverty in urban and rural settlements.
 
 

42. The Technical Cooperation Division witnessed in 1998 its most successful year since its creation; driven by requests from Governments, local authorities and international and bilateral institutions, it backstopped close on 200 projects in 86 countries and over 40 global, regional and interregional programmes. The financial equivalent of these activities amounts to about $270 million (taking into due consideration the lifespan of programmes and projects) while the 1998 budget amounted to more than $70 million. Key areas of support are the reconstruction of war-torn societies, particularly in Africa, the Arab States and Asia, while technical assistance to countries hit by natural disasters is growing substantially. The Centre provided technical assistance to Afghanistan, Bangladesh, Ecuador, Guatemala, Iraq, the Islamic Republic of Iran, Somalia, the Sudan and to countries of the Great Lakes region in Africa.
 
 

43. Work on shelter and social services focused on the appraisal of experiences with public-private partnerships in the housing sector, and on assessing the importance of housing policies for assisting countries implementing the Habitat Agenda. Working contacts were established with the Office of the United Nations High Commissioner for Human Rights, in response to requests from the Commission on Human Settlements, so that a joint strategy on the full and progressive realization of the human right to housing could be prepared. The Centre also started preparatory work for the third edition of the General Assembly-mandated Global Report on Human Settlements, with the theme of "Housing and homelessness". At the local level, the Centre started assessing and documenting the work it had conducted over previous years on strengthening the capacity of poor urban communities to carry out assisted self-help projects in improving their shelter and basic services.
 
 

44. In the field of urban management, the Centre embarked on the third phase of the joint UNDP/UNCHS (Habitat) Urban Management Programme, which continued its work on assisting local authorities with operationalizing strategies for improving urban governance, reducing urban poverty and on reducing urban crime, in countries of Africa, Asia and Latin America. The Centre also worked on preparing and testing training materials for elected local government officials through a capacity-building programme in selected countries in Africa, Asia and Eastern and Central Europe. In partnership with the World Associations of Cities and Local Authorities Coordination (WACLAC), the Centre launched a major initiative in 1998, on the preparation of a world charter of local self-government.
 
 

45. In 1998, the Centre was able to secure funding from the United Nations Fund for International Partnership (UNFIP) to embark on a joint project with UNEP on managing water for African cities, as a contribution to the system-wide initiative on Africa. Under the global Sustainable Cities Programme and the local Agenda 21 programme, demonstration projects on participatory environmental management expanded in selected cities of Africa and Asia.
 
 

46. The Centre established a Global Urban Observatory as its main tool to monitor and assess progress in the implementation of the Habitat Agenda. For this purpose, the Global Urban Observatory utilizes already existing facilities for data collection, analysis and dissemination, through its programmes on urban indicators and best practices. The results of this activity are channelled into preparing the Centre's biennial state-of-the-world's-cities report. Despite crucial support from the Department for International Development (DFID) and the World Bank, more funds are needed in 1999 to complete the planned outputs.
 
 

47. The revised biennial budget for 1998-1999 amounts to $22,808,300, reflecting an increase of $1,892,900, as compared to $20,915,400 for the initial biennial budget for 1998-1999. The total revised budget for the biennium 1998-1999 includes a programme budget of $18,806,900, a support budget of $1,548,000 and a management and administration budget of $2,453,400 (table 2).

48. The presentation of the revised budget for 1998-1999 highlights areas of change only, with no presentation of budget and activities approved in the context of the initial budget of 1998-1999.

49. The following are the areas where changes are proposed in the revised estimates:

    (a) Staff and non-staff costs of the information offices are shown under programme support budget instead of programme costs;

    (b) There is a decrease in the budget provision for consultants;

    (c) Under the "other expenditures" category, project commitments from general-purpose funds are shown, indicating the decrease in the proposed budget estimates.
 
 

50. The revised biennial programme budget for 1998-1999 amounts to $18,806,900, reflecting a decrease of $519,500, as compared with $19,326,400 for the initial biennial programme budget for 1998-1999. The revised programme budget from general purpose funds for the biennium 1998-1999 is estimated at $3,406,900, as compared to $5,741,000 in the initial budget estimates for 1998-1999. There is a decrease of $2,334,100 or 40.6 per cent. The revised budget for 1998-1999 for special purpose funds is estimated at $15,400,000 compared to $13,585,400 of the initial budget estimate for 1998-1999. There is an increase of $1,814,600 or 13.4 per cent.

51. The initial and revised biennial programme budget for 1998-1999 are presented in table 5 by object of expenditure. Staffing information is presented in table 7.
 
 

52. The revised budget for posts under general purpose funds for 1998-1999 amounts to $1,961,900, representing a decrease of $580,800, as compared with $2,542,700 in the initial appropriations for 1998-1999. The decrease is due to the transfer of two P-4 posts and one L-L post of the information offices to the programme support budget.
 
 

53. The revised budget for consultants and experts for 1998-1999 amounts to $125,000, representing a decrease of $50,000, as compared with $175,000 in the initial appropriations for 1998-1999. As mentioned earlier, the savings are due to the combination of some of the outputs, when this is considered feasible and useful, and to the cancellation of those activities which are considered low priority.
 
 

54. An amount of $150,000, budgeted in the initial budget for 1998-1999 for the information offices, is now shown under the programme support budget. The revised budget for 1998-1999 shows no allocation under this category.
 
 

55. An amount of $100,000, budgeted in the initial budget of 1998-1999 for the Information Offices, is now shown in programme support budget. The revised budget for 1998-1999 shows no allocation under this category.
 
 

56. In the initial budget estimates for 1998-1999, an amount of $2,453,300 was shown for project activities from the Foundation general funds. The project activities are undertaken by UNCHS (Habitat), to implement those parts of the approved work programme financed from extrabudgetary resources but not included in the programme costs. The second category of projects funded consists of support to developing countries with technical assistance in the formulation of project documents for submission to funding agencies. The revised estimate for 1998-1999 amounts to $1 million reflecting a decrease of $1,453,300. These actions were taken during the current biennium with a view to further streamlining the activities of the Centre by giving it a more focused work programme.
 
 

57. The revised budget for the biennium 1998-1999 amounts to $2,203,400, reflecting an increase of $614,400, as compared to $1,589,000 for the initial budget for 1998-1999. The revised budget includes the budget for management and administration. Budget estimates for management and administration are presented by object of expenditure in table 5. The staffing situation is shown in table 7.

58. The revised management and administration budget for 1998-1999 amounts to $2,203,400, which shows an increase of $614,400, or 27.9 per cent, over 1998-1999 initial estimates. Essentially, the budget covers the resources provided to the Office of the Executive Director. This also includes the reimbursement for services provided by the United Nations Office at Nairobi to the Habitat and Human Settlements Foundation. The details of this appropriation are as set out in the following subsection.
 
 

59. The revised budget for posts for 1998-1999 amounts to $793,400, reflecting an increase of $464,400, as compared with $329,000 in the initial budget for 1998-1999. Two P-4 posts and one General Service post were budgeted under programme costs in the initial budget for 1998-1999 and now are shown under the management and administration budget, with a corresponding decrease under programme costs. Four posts - one Assistant Secretary-General, one D-1, one P-5 and one P-4 - were frozen for the biennium 1998-1999.
 
 

60. The revised budget for general operating expenses for 1998-1999 amounts to $1,010,000, as compared to $910,000 in the initial budget for 1998-1999. This increase in expenditures is required to cover the operating expenses of the information offices. There is a corresponding decrease of $150,000 from the general operating expenditures under programme costs in the revised 1998-1999 budget.
 
 

61. The revised budget for supplies and materials for 1998-1999 amounts to $50,000 for the information offices, with a corresponding decrease of $100,000 under the programme cost budget.
 
 

62. An amount of $300,000 is provided from general purpose funds for reimbursement for services provided from the United Nations Office at Nairobi to the Foundation. In addition, reimbursement to the United Nations Office at Nairobi is provided, to a level of $852,900, for services to technical cooperation activities. An amount of $250,000 is also provided to the Office from the programme support income from the special-purpose-funded projects.
 
 

63. In accordance with financial rule 303.1 of the United Nations Habitat and Human Settlements Foundation, the Executive Director of UNCHS (Habitat) is submitting the present proposed budget of the Foundation for 2000-2001 for both income and expenditure. The proposed budget covers anticipated programme and programme support costs of the Foundation. In accordance with rule 303.5, the proposed budget was submitted to ACABQ for examination and comment. Both the proposed budget and the comments of ACABQ are submitted to the Commission on Human Settlements for its consideration and approval. The comments of ACABQ may be found in its report, contained in the annex to document HS/C/17/9/Add.1.
 
 

64. During the biennium 1998-1999, the Centre went through a significant process of assessment and revitalization, in response to requests to the Secretary-General by the General Assembly and the Commission on Human Settlements. The proposed work programme for the biennium 2000-2001 was prepared during this process, to reflect the need for a strategic focus with a limited number of well defined objectives, while also providing for the necessary continuity with the overall orientation of the medium term plan for the period 1998-2001. The work programme for the biennium 2000-2001 provides the first opportunity to signal the fundamental changes that will be undertaken within UNCHS (Habitat) - and between UNCHS (Habitat) and its partners - to make the Centre's new strategic vision a reality. This will require substantial change in the manner of the Centre's work, as well as in the work programme itself, and will enable UNCHS (Habitat) to operate as a dynamic, learning organization. The Work Programme is designed to provide the flexible framework necessary to allow the programmatic introduction of new work practices, which will, in many respects, be the most important component of the longer-term revitalization of the Centre. In devising the activities of the new work programme for the biennium 2000-2001, the existing knowledge and the Centre's institutional memory have been utilized to ensure continuity of the successful elements of the Centre's work.

65. In summary, the work programme is designed to focus on the following elements:

    (a) Organizing global campaigns within the context of two major themes of the Habitat Agenda on, first, security of tenure and, second, urban governance;

    (b) Raising public awareness on the themes of the Habitat Agenda in the context of urbanization, on the importance of the issues covered by the global campaigns and on the role of strategic partnerships;

    (c) Continuing the building of national and local capacities for implementing the Habitat Agenda, in accordance with national priorities and plans of action, both through normative and operational activities;

    (d) Monitoring and assessing the implementation of the Habitat Agenda at global, regional, national and local levels;

    (e) Supporting the establishment and strengthening of strategic and operational partnerships with local authorities, non-governmental organizations, community-based organizations, the private sector and other partners in civil society;

    (f) Servicing the Commission on Human Settlements in its role of, first, the coordination and global monitoring of the implementation of the Habitat Agenda and, second, serving as preparatory committee for the special session of the General Assembly for an overall review and appraisal of the implementation of the Habitat Agenda, as well as servicing the special session in 2001;

    (g) Building a capacity for critical and effective internal evaluation of the Centre's substantive work.

66. In accordance with the above considerations, the work programme for the biennium 2000-2001 will be implemented through two subprogrammes:

    (a) Subprogramme 1, on adequate shelter for all; and

    (b) Subprogramme 2, on sustainable urban development.

67. The changed structure of the work programme under the above two subprogrammes is in keeping with the overall orientation of the current medium-term plan, i.e., to monitor, assess and provide support to the implementation of the Global Plan of Action of the Habitat Agenda.

68. A key function of the Centre is the monitoring of global trends and conditions and the assessment of progress in implementing the Habitat Agenda at the international, regional, national and local levels. This function will contribute to linking the normative policy development and the substantive capacity-building activities of UNCHS (Habitat) and of its partners. Its key objective is to promote integrated and cohesive policies at all levels. It will further help to develop and expand a range of knowledge-based tools and instruments, as called for by the Habitat Agenda in support of the implementation of national and local plans of action. A major activity for the biennium 2000-2001 will be the preparation and servicing of the special session of the General Assembly in 2001.

69. The activities of the proposed work programme are designed to ensure that maximum impact can be achieved within the limited human and financial resources that are available from the regular budget of the United Nations, from general and earmarked voluntary contributions to the Foundation and specific projects and programmes funded by UNDP and other resources.

70. The harmonized budget format, as adopted by other United Nations bodies, demonstrates more clearly how the resources of the Foundation are used in achieving the objectives of the Habitat Agenda.
 
 

71. The general purpose budget for 2000-2001 is estimated at $8,349,600, as compared to $5,610,300 in the revised estimates.

72. An amount of $6,011,100 is budgeted for programme expenditure, as compared to the revised estimate of $3,406,900 for 1998-1999. The budget estimates for 2000-2001 clearly demonstrate volume changes and cost changes. Volume changes - both increases and decreases - in resource requirements are attributable to changes in the level or nature of activities carried out by UNCHS (Habitat) during the current biennium (1998-1999) and those proposed for the biennium 2000-2001. The cost changes show any increase or decrease in the cost of resource input in the budget period 2000-2001, as compared with that in the revised budget of 1998-1999, arising from changes in costs, prices and exchange rates. The Foundation resource requirements are recosted, on the basis of overall trends and experience over the past three years relating to increases in staff costs and rates of inflation, as well as exchange rate fluctuations. To this end, the following criteria were applied: an annual inflation rate of 3 per cent for Professional staff, 15 per cent for General Service staff and 5 per cent for non-post items.
 
 

73. The proposed budget for posts under general purpose funds for 2000-2001 amounts to $3,517,500, representing an increase of $1,555,600. It covers 11 Professional posts and 16 General Service posts.
 
 

74. An amount of $157,500 is budgeted for 2000-2001, representing an increase of $32,500, as compared to the 1998-1999 revised estimates of $125,000. The increase is attributed to volume changes of $25,000 and cost changes of $7,500. Consultancy services are needed to produce some of the outputs of the work programme for 2000-2001. An amount of $28,000 is budgeted for expert group meetings on the global campaign for security of tenure and governance. The programme elements and outputs where consultancy resources are needed and the Foundation share of the expert group meetings are presented in table 8. They are identified as programme elements to be supported by the extrabudgetary resources in the regular budget presentation of the work programme for the biennium 2000-2001.
 
 

75. An amount of $105,100 is budgeted for the biennium 2000-2001, as compared to the 1998-1999 revised estimate of $100,000. The increase of $5,100 is attributed to cost changes. Notwithstanding the increase in travel costs, there is no real growth under this category. The travel budget is mainly used for attending inter-agency meetings and partners' consultations that are necessary to deliver the work programme elements.
 
 

76. An amount of $231,000 is budgeted for the biennium 2000-2001 for contractual services, as compared to the 1998-1999 revised estimates of $220,000. The increase of $11,000 is attributed to cost changes. The amounts under this category are mainly intended for printing and production of the technical publications related to the work programme elements. Printing costs have been progressively scaled down over the past four years, as more and more technical reports are being disseminated through electronic media (i.e., the internet).
 
 

77. As in the past, a large portion of the resources of the Foundation are devoted to project activities. An amount of $2 million is budgeted for the biennium 2000-2001, as compared to $1 million of the revised estimates for 1998-1999, representing an increase of $1 million. These project activities include part of the approved work programme for 2000-2001 financed from extrabudgetary resources but not included in the programme costs of the budget for 2000-2001. The project activities funded by the Foundation also entail project expenditure incurred in providing the Governments of developing countries, particularly those of the least developed countries, with technical assistance for project formulation and with policy advisory services. These projects are small-scale and cover such areas as low-cost housing, slum and squatter upgrading, human settlements finance and legislation and land management within the context of the Habitat Agenda.

78. Given the limited resources of the Foundation, the project activities financed from it are necessarily restricted to preparatory assistance and activities with a demonstrated multiplier effect and those which are likely to have a significant impact on the overall development of human settlements.

79. Resources from this budget line will also be provided to information activities documentation and awareness-raising activities which involve the collection, production and dissemination of information on policy issues, programmes and projects.

80. It may be noted that the commitments under this item are subject to the availability of non-earmarked general funds.
 
 

81. An amount of $2,338,500 is budgeted in the biennium 2000-2001, as compared to $2,203,400 in the revised estimates for 1998-1999. The increase of $135,100 is attributed to a cost increase - i.e., inflation - of $157,100 and a volume decrease of $22,000. The volume changes are mainly in the categories of posts (decrease) and general operating expenses and support to the United Nations Office at Nairobi (increase). The overall budget of $8,349,600 for 2000-2001 is distributed as follows: administration and management costs represent $2,338,500 or 28.0 per cent and programme costs $6,011,100 or 72.0 per cent of the total proposed budget. In view of the revitalization of the Centre and the new focused work programme, the Centre does not anticipate any vacancy rate in the biennium 2000-2001.

82. The overall revised budget of $5,610,300 for 1998-1999 is distributed as follows: programme support costs represent $2,203,400, or 39.2 per cent, and programme costs amount to $3,406,900, or 60.8 per cent. It may be noted that the revised programme support expenditure for 1998-1999 represents 39.2 per cent of the total revised budget, whereas, for the biennium 2000-2001, programme support expenditure constitutes 28.0 per cent of the total budget. The decrease in programme support expenditure in 2000-2001, as compared to the revised estimates for 1998-1999, is due to a decrease in staff costs under management and administration, as explained under the category of posts.
 
 

83. An amount of $605,000 is budgeted for posts in the biennium 2000-2001, as compared to $793,400 in the revised budget estimates for 1998-1999. There is an increase of $78,600 in cost changes and a decrease in volume changes of $267,000. The volume changes result essentially from the transfer of one D-1 post to programme activities.

84. The Executive Director proposes to abolish the post of Assistant Secretary-General, as the Executive Director of the Centre assumes the responsibilities of Administrator of the Foundation. The Executive Director's proposal is intended to reduce the programme support budget, provide more resources to programme activities and improve the financial base of the Centre.

85. Two P-4 posts and three General Service posts are budgeted in 2000-2001 as compared to one ASG, one D-1, two P-4s and three local level posts (a total of seven posts) in the revised estimates for 1998-1999. In the biennium 1998-1999, the ASG post was frozen and hence did not appear in the revised budget estimates for the biennium 1998-1999.
 
 

86. An amount of $52,500 is budgeted for travel, as compared to $50,000 in the revised budget estimates for 1998-1999. The increase of $2,500 is due to cost changes. Travel costs under this budget line are mainly intended for fund-raising activities and participation at ACABQ meetings.
 
 

87. An amount of $1,228,500 is budgeted for general operating expenses for 2000-2001, as compared to $1,010,000 for the biennium 1998-1999, representing an increase of $218,500. The increase is attributed to an amount of $58,500 in cost changes and $160,000 increase in volume changes. All general operating expenses are now shown under the programme support budget and none under programme costs.

81. The general operating expenses may be broken down as follows:
 

Category (US dollars)	1998-1999 (revised)	2000-2001  (proposed)
Rent	300,000	270,000
Communications	600,000	600,000
Information offices	100,000	100,000
Hospitality	10,000	10,000
Rental and maintenance of Furniture and Equipment	-	169,500
Miscellaneous	-	79,000
TOTAL:	1,010,000	1,228,500

(a) Rent

88. ACABQ requested clarification on rental payments from the Foundation and the sharing of rent among regular budget, Foundation and operational activities. The United Nations Office at Nairobi undertook an analysis of office space requirements for UNCHS (Habitat), based on established norms and procedures. Until the end of 1997, the rent was divided equally between regular budget and extrabudegtary resources. The extrabudegtary share of the rent was equally divided between the Foundation and the overheads earned from technical cooperation activities. In accordance with the recommendation of the Controller to the United Nations Office at Nairobi, the rent is now charged on the basis of the proportions of regular budget and posts of the Centre. Currently, 5,212.47 square metres of space is occupied by the Centre. Of this, 1,394.88 square metres of space is occupied by staff associated with the Foundation. Rent will amount to $251,080, charged at a rate of $90 per square metre per year. The remaining part of the rent will be shared between the regular budget and the income from operational activities.

(b) Communications

89. An amount of $600,000 is budgeted for 2000-2001, with no increase over the revised 1998-1999 budget. The communication items include telephone, telex, fax, postage and pouch services, as well as freight and forwarding expenses. This budget line also includes charges for shipping the Centre's technical publications.

(c) Information offices

90. An amount of $100,000 is budgeted in 2000-2001, with no increase over the revised 1998-1999 budget. This amount is requested for the day-to-day expenses of the information offices, in respect of such items as utilities, furniture and equipment, and also miscellaneous expenses.

(d) Hospitality

91. An amount of $10,000 is provided for hospitality, with no increase over the revised 1998-1999 budget.

(e) Rental of equipment and maintenance of furniture and equipment

92. An amount of $169,500 is budgeted for the biennium 2000-2001. This amount is requested for the maintenance of computers and associated equipment and for the rental of photocopying machines.

(f) Miscellaneous

93. An amount of $79,000 is budgeted in 2000-2001 for miscellaneous expenses.

(g) Supplies and materials

94. An amount of $52,500 is budgeted for 2000-2001, as compared to $50,000 in the revised estimates for 1998-1999. The increase of $2,500 is attributed to cost changes. The resources requested under this heading are based on the pattern of expenditure in the current biennium. The requirements include costs to cover office supplies and materials required for the operation of the information offices and the Foundation.

(h) Other expenditures

95. An amount of $400,000 is budgeted in 2000-2001, as compared to $300,000 in the revised estimates of 1998-1999. The increase is attributed to a $15,000 increase in cost changes and $85,000 in volume changes. The amount of $400,000 will be provided to the United Nations Office at Nairobi from general purpose resources.

96. In paragraph 26 of its report, ACABQ requested itemized information on the support services provided by the United Nations Office at Nairobi to the Foundation, their costs and personnel paid from this subvention to the Office. The Advisory Committee is of the view that, before approving the budget of the Foundation, the Commission on Human Settlements should satisfy itself that the services provided by the United Nations Office at Nairobi to the Foundation are indeed required and that the payment for these services is justified.

97. The initial budget presentation for the biennium 1998-1999, as presented in document HS/C/16/12 dated 19 March 1997, requested an amount of $1,281,500. Based on the recommendation of ACABQ, the Commission on Human Settlements revised the support budget to the United Nations Office at Nairobi to $300,000 from the general resources of the Foundation for the biennium 1998-1999 (decision 16/29 of the Commission, dated 7 May 1997). An amount of $250,000 is also provided from the programme support income to cover administrative services provided by the Office in executing the projects funded from the special purpose contributions ($15,400,000) for the biennium 1998-1999. It may be noted that an amount of $336,000 is budgeted from the programme support income for the biennium 2000-2001 (see paragraph 103 below), for administrative services for executing the projects on special purpose funds ($13,100,000). The administrative services provided by the United Nations Office at Nairobi are mainly in the areas of accounting, staff administration, information technology and contracts and procurement services.
 
 

98. The initial budget estimate for 2000-2001 under special purpose funds amounts to $14,670,000, as compared to $17,198,000 for the 1998-1999 revised budget, representing a decrease of $2,528,000 (table 9).
 
 

99. An amount of $13,100,000 is budgeted for programme expenditure for the biennium 2000-2001, as compared to $15,400,000 in the revised budget for 1998-1999.
 
 

100. An amount of $1,234,000 is budgeted for programme support in 2000-2001 as compared to $1,548,000 for the biennium 1998-1999. This includes posts and contractual services as detailed below.
 
 

101. An amount of $1,137,300 is budgeted for one L-3, one L-2 and 18 General Service posts to provide support for the implementation of projects.
 
 

102. An amount of $96,700 is budgeted for printing costs of the technical publications emanating from the implementation of the special-purpose-funded projects.
 
 

103. An amount of $336,000 is budgeted for the provision by the United Nations Office at Nairobi of administrative services for the special-purpose-funded projects. Accordingly, the total contribution of UNCHS (Habitat) to the United Nations Office at Nairobi for the biennium 2000-2001 will amount to $1.85 million, of which $1,114,000 will come from technical cooperation support income, $400,000 from Foundation general purpose funds and $336,000 from special purpose programme support income.
 
 

* This includes an amount of $400,000(estimates) as savings on cancellation of prior period obligations.
 
 

In addition to the introduction of a new budget format, other adjustments were introduced in response to directives of the Commission on Human Settlements (resolution 16/19) and the recommendations of ACABQ. This covers the issues of income estimates, programme support income and programme support expenditure. The budget submission for the biennium 2000-2001 also covers a number of observations made on the 1998-1999 biennial budget, specially that of ACABQ report HS/C/16/9/Add.1 dated 22 April 1997. The various observations and requests of ACABQ and the response of the Centre are provided below.
 

Previous recommendations

1. The Commission on Human Settlements in its resolution 16/19 dated 7 May 1997 urged the Executive Director "...to devise a new budget format, following the recommendations of ACABQ and in consultation with all Member States, in order to make financial information readily available in a clear and accessible way".

The 'Revitalization Team' appointed by the Ag Executive Director has recommended that the UNCHS (Habitat) budget should be presented in a harmonized way, providing information on all resources available to the Centre for the implementation of the mandated work-programme, and providing for an improved understanding of the overall financial situation of the Centre.

2. Accordingly, the Executive Director decided to present the budget in a manner similar to the harmonized budget model of UNDP, UNICEF and UNFPA, as well as UNDCP and the regular budget of the United Nations.

3. In preparing the revised budget for 1998-1999 and 2000-2001 accordingly, the following budget concepts have been introduced in the budget of the UN Habitat and Human Settlements Foundation (UNHHSF).

(a) Compatibility with the regular budget of the United Nations in order to provide for an integrated budget presentation;

(b) Brief performance report on the final 1998-1999 biennial budget;

(c) Detailed presentation of the financial situation, utilizing a systematic approach for establishing income estimates;

(d) Revision of the approved budget for 1998-1999 within the biennium.

5. The Foundation distinguishes between general purpose (non-earmarked voluntary contributions) resources, which are used to fund the biennial support budget as well as programme activities and special purpose resources, which are provided to earmarked programme activities.

A: Payments received during 1998
 

B: Unpaid Pledges for 1998