2006-2007 BIENNIAL SUPPORT BUDGET PROPOSAL An Overview

1. 2006-2007BIENNIAL SUPPORT BUDGET PROPOSALAn Overview Informal Executive Board Discussions 31 August 2005

2. SESSION OBJECTIVES: • Recap of issues presented in May informal session on UNDP’s 2006-2007 budget strategy: • Key drivers in developing the 2006-2007 budget • UNDP strategic direction and funding modalities • Overall financial situation • The 2006-2007 support budget proposals • ACABQ Comments

3. Recap of 20 May informal session

4. Multi-Year Funding Framework • The 2006-2007 biennial support budget is an integral part of UNDP’s second Multi-Year Funding Framework (MYFF) for 2004-2007 • The biennial support budget covers the second part of the MYFF period, and it acts as the strategic framework in aligning organizational capacities and related resources to deliver on goals and priorities of the MYFF • Gender and capacity development continue to be mainstreamed across all UNDP practices in support of the MYFF goals: achieving the MDGs and reducing human poverty; fostering democratic governance; crisis prevention and recovery, energy and environment; and responding to HIV/AIDS.

5. KEY DRIVERS: DEVELOPING THE 2006-2007 BUDGET UN REFORM UNDP STRATEGIC DIRECTION FINANCIAL SUSTAINABILITY EB DECISIONS • BUDGET STRATEGY • Regular resources remain the bedrock for funding the core functions and related priorities of UNDP • Consolidation of the 2004-2005 budget strategy • Strategic investments funded through re-deployment • Gradual implementation of proportional funding between regular and other resources BUDGET PRIORITIES BUDGET PROPOSALS

6. STRATEGIC DIRECTION FOR 2006-2007 • Commitment to and support for UN reform • Emphasis on assistance to programme countries’ efforts to achieve MDG targets by 2015 • Realignment of the funding modalities for operational support structures to reflect the multi-funded nature of UNDP • Continued support to 2004-2005 key themes • Strengthened partnerships • Enhanced knowledge and learning • Improved efficiency, performance and results based management • Continued focus on crisis prevention and recovery

7. PROPOSED FUNDING STRATEGY • Continued application of the base structure concept covering the core functions of UNDP • Gradual implementation of proportional funding of UNDP capacity through increased contribution from other resources • Adoption of a cost classification methodology to align funding of programme costs from programme resources pool • Further consultations on Results based budgeting (RBB) leading to harmonized approach with partner agencies

8. 2. Overall financial situation

9. A multi-funded UNDP: Biennia 1992-1993 to 2006-2007(estimates for 2004-2005 and 2006-2007) Donor Resources: Regular Voluntary Contr. Local Resources: Govt. cost sharing Donor Resources: Trust Funds & 3rd Party cost sharing

10. UNDP Projected Contributions (2004-2007) (millions of US $)

11. ESTIMATED USE OF 2006-2007 TOTAL UNDP RESOURCES ($8 159 million) Programme Support & Management & Administration& UNCDF & UN Mandated Security 10.2% (Millions of US$, Percentages) Programmes & Support to the Operational activities of the UN 89.8%

12. 3. 2006-2007 support budget proposals

13. KEY ELEMENTS • Zero net real growth budget - nominal increase reflecting $ 85.7 million in mandatory costs increases ($54.0 million in 2004/2005), comprised of: • $6.5 million related to security; • $4.7 million in currency adjustments ($0.9 million in 2004/2005); • $57.3 million in post-related cost adjustments ($35.1 million in 2004/2005); • $17.2 million in operating cost adjustments ($18.0 million in 2004/2005); • Incremental shift towards proportionate funding between regular and other resources ($ 11.3 million); • Reduction of $ 5 million at headquarters • Strategic investments ($16 million) funded through re-deployments • Exceptional investment of $10 million in UNCDF as mandated by the Executive Board. • UN mandated security costs presented as a distinct regular resources funding requirement totaling $31.2 million, of which $19.3m represents an increase.

14. UNDP 2006-2007 SUMMARY OF PROPOSALS

15. STRATEGIC INVESTMENTS (Total $16.0 million) Country Offices Headquarters • Country directors: $4.5 million • Security: $0.9 million • Advocacy and Outreach $4.0 million • ERP – Atlas $1.9 million • Global service centre $1.8 million $0.3 million • UN Development Group office $1.1 million • Administration of Justice $1.1 million • Base structure alignment $0.4 million TOTAL $13.1 million $2.9 million

16. 4. ACABQ Comments

17. ACABQ COMMENTS • While welcoming the changes in the presentation, the ACABQ believes there is room for further improvement to streamline the presentation, to promote greater clarity and transparency; • UNDP continues operational and programmatic reforms in line with the 2004-2007 Multi-Year Funding Framework; • More justification and rationale on proposals for new posts and reclassifications in related narratives; • High priority to Results-Based budgeting and harmonization with other agencies in 2008-2009; • More efforts to reduce expenditure on programme support and management and administration in respect of regular resources; • The Committee points to comments on the need for integration, coordination, and rationalization of the security management system, to avoid previous duplications of security structures, in its report on the strengthened and unified security management system for the United Nations (A/59/539);

18. ACABQ COMMENTS (continued) • Enhancement of cooperation and coordination with DPKO; • Efforts should be made to hire professional staff at the entry levels so as to ensure rejuvenation of UNDP; • Given the considerable expenditure on state-of-the-art technology, ACABQ expects tangible results in efficiency gains and savings; • Related to UNIFEM: More efforts to reduce expenditure on programme support and management and administration in respect of regular resources.

19. DISCUSSIONS