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20.06.2017 - ODG

UNESCO Director-General convenes special senior management meeting to examine contingency plan in the face of protracted financial crisis

On 20 June, 2017, the Director-General convened a special senior management meeting in order to discuss the protracted critical financial situation faced by the Organization as a result of the current shortfall in cash flow, stemming from the non-payment of major contributors to the Organization.

"The spirit of this meeting, which has generated considerable concerns amongst staff across the Organization, is for the SMT to face the current financial situation in which the Organization finds itself right today," said Irina Bokova. "As the Chief Administrative Officer of this Organization, it is my responsibility to call upon each of you to take action and for us all together to anticipate risks and devise measures to confront the present financial situation with the full sense of responsibility that falls upon each of you. No one should be in a denial mode”.

The Director-General urged the SMT to ensure a close monitoring of the cash flow situation from the perspective of their respective Sectors and Offices.

In doing so, they are required to undertake an in-depth risk assessment of activities and operations, and to submit to her proposed mitigating measures to face the current situation up to the December 2017 and prior to the implementation of the contingency plan in the fall. 

She highlighted that all managers should engage in a thorough review of their activities, looking at statutory commitments and costs, reducing costs across the board from activities to staff, technical expertise and travel by the end of June, prior to the implementation of the contingency plan in line with Executive Board Decision 201 EX/25 part II. 

“In doing so, we are complying with our corporate responsibility to monitor the financial situation of the Organization as well as its implications for programme delivery," said Irina Bokova.

The Director-General also underlined that unlike the period 2011/2012, the Organization has a risk assessment mechanism now in place and therefore managers have to devise and monitor their individual risk assessment plans. 

She also stressed that there is will not be any emergency fund to provide any relief as was the case in 2012, thereby creating additional pressure on the already strained budget resources. 

The Chief Financial Officer of the Organization gave a detailed presentation of the cash flow situation, explaining that in order to make payments, UNESCO needs predictability of cash flow. She pursued by stressing that the Organization is in a unique situation with 3 of the top 25 contributors with arrears currently of $75M to which chronic arrears add up every biennium. 

The Chief Financial Officer indicated that sustained efforts had been deployed to remind Members States of their obligations, and in particular to secure a date of payment, in order to plan borrowing needs.

The Director of the Bureau of Strategic Planning informed about the consultative process with Sectors and Services, requesting them to assess the impact on programme delivery ahead of implementing the contingency plan, including by identifying major commitments, events and operations planned for the next 6 months which would be impacted by this budget reduction, whether at Headquarters or in the Field. 

A preliminary analysis of contributions received is currently underway. A broad-based risk assessment should be applied, taking into account the broader risks to the Organization, as well as possible mitigation measures, including programmatic risks and UNESCO’s strategic positioning risks, and their possible mitigation.

He also indicated that the Risk Management Committee should be consulted for advice on risk analysis and recommendations for risk mitigation. 

Lastly, the Director-General requested the Risk Management Committee to examine in detail risk assessment plans across the Organization and submit to her its final recommendations. 

She also informed of her intention to address formal letters to the Chairperson of the Executive Board and to the President of the General Conference on the financial situation in order to maintain an open and transparent dialogue on this matter. 

"Member States have to be fully informed and are an integral part of the response to the critical situation faced by the Organization” she added. 

The Director-General concluded by requesting that the Open-ended Working Group on the preparation of the 39 C/5 that is going to meet on Thursday 29 June be fully informed on the ongoing risk assessment analysis and contingency plan.

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