RESTRICTED GENERAL AGREEMENT ON L/42 TARIFFS AND TRADE 12 Limited Distribution

FINANCING OF THE 1955 BUDGET Report by the Executive Secretary

I . INTRODUCTION

1. In accordance with the resolution approved by the CONTRACTING PARTIES on 29 , the Executive Secretary has the honour to report "on the statue of budgetary expenditure including all commitments entered into to meet unforeseen and extraordinary expenses". This report contains information on budgetary expenditure up to 30 , on budgetary income received during the first nine months of 1955, on the status of accounts receivable (including contributions), as well as on administrative and financial arrangements made in 1955.

II. AUDITED ACCOUNTS FOR 1954

2. The audited accounts for 1954: as well as the report of the Director of the United Nations Inspection Service on the Audit of the Accounits shall be circulated as soon as they are received from New York in document L/422/Add.1. In agreement with the auditor, the presentation of the accounts has been slightly modified this year. The accounts for 1954 include: (a) The accounts of the GATT i, Income and Expenditure Account for 1954 ii. Statement of Budgetary Expenditure for 1954 iii. Balance Sheet as at 31 (b) Supporting Statemuents iv. Income and Expenditure Budget Account for 1954(showing a comparison between the budget estimates and the actual receipts and expenditure during the budget year) v. Statement of contributions as at 31 December 1954 (showing for each budget year since 1948 the contributions assessed, the collections and the arrears in contributions) vi, Receipts and Payments Account for the year 1954 showingg the actual receipts on account of the various financial years and the actual payments made on account of the 1954 budget year and on other items) (c) Acoouts of the I.S.B.F. vii. Income and Expenditure Account for 1954 viii. Balance Sheet as at 31 December 1954. L/422 Page 2

3. More dotailed statements showing tho appropriations and expenditure for each budgetary item, as well as other subsidiary accounts of the secretariat may be inspected by delegates at the Administrative Office of the secretariat. 4. The income received in 1954 on account of that financial year amounted to 102,63 per cent of the income budget. The arrears on current contributions at the end of the year accounted for a smaller percentage of the assessment than in 1953 (3.32 per cent as compared with 8.23 per cent in 1953). In the course of 1955, these arrears, which amounted to $11,350.90 have boon roduced to $3,000.--. The miscellaneous receipts were abnormally high, sinco they included the Japaneso contribution to the expenses of the CONTRACTING PARTIES, an income which had not been budgeted for when the estimates were approved. 5. Budgetary expenditure in 1954 increased by more than $63,000.-- as comparod with 1953.1 actual expenditure in 1954 represented 87.75 per cent of the budget estimates as compared with 67.63 per cent in 1953, The increase in expenditure required tho full use of tho appropriation for unforeseen expendi- ture. The increase in expenditure is due to a large part to the length of tho Ninth Session which involvod an expenditure of $45,711.09 as compared with $21,518.71 for the Eighth Session in 1953. Tho balance of the increase is accounted for by increased workload during the intorsessional period and expenditure resulting from the increase in tho permanent establishment. About $16,000 more were spont on Section IV "Salaries,' Wages and Official Travel"; and the rest, i.e. approximately $23,000 is accounted .or by Section V "Common Staff Costs". A large part of this increase is due to the new arrangements adopted by the CONTRACTING PARTIES for the building up of a Repatriation Grant Fund. The other major increase in this section results from increased liabilities on account of travel on home leave. 6. As a result of increased expenditure, the cash surplus has been sub- stantially lower than in preceding years. It amounted to $51,229.14 and was transferred to the Reserve in accordance with the decision of the CONTRACTING PARTIESS. 7. The audeitod Accounts for 1954 are submiettd to the CONAR&CTINPARTIESS for approval.

III. EPDEDNITUEq FORTHE . EJRIOD 1 ANUARY Y ,3O EPKTMBER 1955 TABLE I -UDGETARRY EXPENDITU ; (.S., Dollnru ) Up to 30 September 1955 (a) Disbursements 266,728.72 (b) Unliquidatod obligations 25,021.54 (c) Total actual expenditure 291,750.26

A comparative Statement of expenditure in 1951> 1952, 1953 and 1954 is contained in document L/307. L/422 Page 3

8. During tho fïrst mine months of 1955, actual expenditure has been considerably higher than during the corresponding period in 1954 ($291,750.26 as compared with $179,103.73). It is estimated that total expenditure for 1955 will be more than 30 per cent above actual expenditure in 1954 and will amount to about $400,000, 9. When estimates of expendituro for 1955 were approved by the CONTRACTING PARTIES, it was contemplated that a major part of the increase budgeted for would be of a non-rocurrent nature. Even though the total actual expenditure this year will probably keep within tho total estimates approved at the last session: the actual exponditure on certain budget item will exceed the corresponding appropriations and, in a number of cases, tho increases result from causes which could hardly be regarded as of a non-recurrent nature. The main Items affected are the following:

COMPARISION BETWEENAPPROPRIATIONS AND ESTIMATED ACTUAL EXPENDITUREFOR CERTAIN ITEMS (U.S. dollars)

Appropriation Estimated actual Difference expenditure

Part I: Section 1. Ninth Session of the CONTRACTING PARTIES (continuation) 30,000.- 49,629.-- + 19,629.- Section 2. Tenth Session 27,100.- 28,344.- + 1,244.- Part II: Soction 1. (ii) Temporary assistance (during intersessional periods) 7 000--- 22,754.- + 15,754.- Section 3. (V) .Partalservices3,000.- 4,066.- + 1066- (IX) Remeval to Le Bocage 500.- 1,187.- 687.- Section 4. Printing 10,000.- 11567.- + 1,567.- Some of this additional expenditure will be met by transfers from other items in the same section which the Executive Secretary is authorized to mako, but it will still be necessary to draw about $27,000 from the Provision for unforseen expendi- ture (Part III).

10. Increasod expenditure in connection with theNinth Session is, of course, of a non-recurrent nature, since it is due to tho prolongation of the Sossion and the decision taken by the CONTRACTING PARTIES to grant an exceptional bonus to the con- forence staff. As regards the Tenth Session, it has been necessary to revise the budget estimates in the light of tho experience gained at tho Ninth Session, and in particular in view of the fact that a number of international meetings will take place in Geneva at tho same time and that it will be necessary to recruit more L/422 Page 4

non-local staff than usual. As regarded the other major source of additional expenditure, i.e. temporary assistance during the intersessional period, this was due to the need for replacing, in all cases, the members of the staff who took ordinary or home leave, but also to a durable increase in the general workload of the secretariat during the intersessional period. The increased expenditure in postage and in printing is also due mainly to non-reccurent causes. The following figures may throw soma light on this point. Documents Reproduction and Distribution during the intersessional Period April/Sept. April/Sept. 1954 1955

Impressions (number of pages of documents rolled) 743,000 1,213,725 Distribution (number of copies of documents distributed) 54,622 104,800

Printing 1954 1955 Number of pages of text printed or offset 740 2,407 Total of pages printed or offset 983,600 2,723,600 Sheets of paper used 32,925 91,913

11. The trend of expenditure in 1955 shows that it is becoming increasingly difficult to forecast with any accuracy what expenditure the decision of the CONTRACTING PARTIESmay actually involve and to meet increased requirements on the basis of a strictly limited budget and with an insufficient number of permanent officials. While it may still have been possible this year to make up partly for the increases in expenditure on certain items by cancelling or postponing certain projects and in cutting down expenditure on other items, this would be far more difficult in the future. The experience gained this year shows that the secretariat could only be able to meet adequately the requirements of governments if the CONTRACTING PARTIESare prepared, either to organize their administration and finances on a more permanent basis, or to enable the Executive Secretary to keep a substantial cash reserve whioh would be at his disposal to meet, not only unforeseen expenditure, but also expenditure exceeding the original estimates. 12. As indicated in paragraph 9 above, it will be necessary to use up the original appropriation for unforeseen expenditure and to use part of the additlonal appropriation voted by the CONTRACTING PARTIES in , As savings were made on soms budget items, it i expected that total expenditure will remain within the original estimates, but, on the basis of present expectations, the financial year will end with practically no cash surplus. L/422 Page 5

IV. INCOME RECEIVED DURING THEPERIOD 1 JANUARY/30 SEPTEMBER1955 TABLE Il - BUDGETARY INCOME (U.S. Dollars) Income Budget Receipte up for 1955 to 30.9.55 %

Contributions 1955 354,000--.1 324,000.- 91,53 Miscellaneous Income 4,600.-- 14,254.03 309.87 Transfer from the Cash Reserve 63,950.-- 63,950.- 100 422,550.-- 402,204.03 95.18 u=Z=31SmIu:SUUu-

13. Income received before the end of September amountcd to 95.18 per Cent of the Income Budget (the corresponding figure wlas 95e56 in 1954). The receipts on account of miscellaneous income contain some items of a non-recurrent nature, such as the payments by delegations for the renteof rmeauxs at Los Omeaux during the tariff negotiationmeand the reJayrmnt by the fepanese Governmont of the travellinr expbnses incu'red ty theeExecutive Secrotary and the Deputy Executive Socretary during their mission to Tokyo, The income derived from sales of publications bas increased this year on the other hand, it has not been possible, in view of the pressure ofawork, to lond =ny personnel to other organizations.

V. RESEVE

14. The reserve set up ii accordance wJth tho resolution of 27 amountod to $228,113.78eon 30 Septembor 1955. Its liquid assets accounted for 98.58 per cent of the total; the other assets represented mainly one 1954 con- tribution still outstanding. 15. In accordance with the decision taken in 1953 regarding the setting up in the balance-sheet of a provision for outstanding contributggns, it is su!Rested tLatthe arrears of cont1ibutiens for e95e bo transforrod to that Provision at tye end of the Year, The crediting of the actual receipts on account of those Contributions would continue to be done as previously.

OF. W UTION0 CONTRIBIONS

16. The following table contains a statement of the contributions due for the variouS financial years on 1 January 19m5, and the anounts received before 30 and in each following month.

1 Revisedoas a resuls if the acce8sson of' Japan. L/422 Page 6

TABLE III- CONTRIBUTION RECEIVED IN 1955 (U.S. Dollars) Current Previous years' contributions contri- butions 1948/49 1950 1951 1953 1954 Contributions due on 1 354,000.- 4,650.-- 15,902.58 2,687.25 3,000.-- 11,350.90 Contributions received up to 30,4.55 179,500,-- 7,979.44 InMay 24,000.-- In June 15,000.-- In July 72,000.-- In August 27,500.-- 371.46 In ,000-

TOTAL 324,000. - - - - 8,350.90

17. As was the case in preceding years, same contributions were in the hands of the Executive Secretary before 31 December 1954. However, contributions did not come in as early in the year as formerly. By April 1955, contributions received amounted only to 50.71 per cent of the assessment (against 60.53 per cent in 1954 and 61.90 per cent in 1953) but, by September 1955, 91.52 per cent of the contributions assessed were remitted (90.35 par cent in 1954 and 88.72 in 1953).

VII. ACCOUNTSRECEIVABLE

18. At the end of 1954, current contributions in arrears were smaller than at the end of 1953 but greater than at the end of 1952; the same remark applies to accounts receivable, in general. On the other hand, the position at the end of September 1955 improved substantially as compared with that obtaining in . The existence of an important backlog of accounts receivable continues to require the maintenance of larger cash balances at the secretariat than would be normal. The following table gives detailed information on that point. L/422 Page 7

TABLE IV - ACCOUNTS RECEIVABLE (U.S. Dollars) Contributions Contributions Miscellaneous Total for current for previous year years

31 December 1949 21 665.96 4,023.95 25,689.91 31 62,902.08 5,550.- 474.76 68,926.84 31 December 1951 45,518.20 31 154.30 4,146.03 80,818.53 31 December 1952 5,338.50 25,927.08 7,198.92 38,464 .50 28,4-04..12 28;596t,3 1,664.61 58,665.06 31 December 1954 11,350.90 26,239.83 1,152.79 38,743.52 30 September 19551 30,000.-- 29,239.83 1,889.86 61,129.69 (33,000.-) (32,544.45) (1 674.47) (67,218.92)

1 The corresponding figures as at 30 September 1954 are given lu brackets

VIII. CONTRIBUTIONS IN ARREARS

19. The following table contains a state, t of contributions due on 30 September 1955. This table has been divided into two parts showing respoctively the contributions due by present contracting parties, and those due by countries which have:»withdrawn from the Agreement, L/422 Page 8

TABLEV - CONTRIBUTIONS DUE AS AT 30 SEPTEMBER 1955 (U.S. Dollars) Contri- Contri- Contri- Contri- Contri- Contri- butions butions butions butions butions butions for for for for for for 1948/49 1950 1951 1953 1954 1955

(a) Contracting parties ITALY 12,000.- 6,000.-- CHILE 3,00_.-

PAKISTAN 3,000 .-- PERU 3,000.- URUGUAY 900.- 2; 650.43 3,000, 3,000.- 3,000.- 9000- 2; 650..43 3,000.-- 3,000.. 30,000.- (b) Contracting parties which have withdrawn from the Agreement, 3,750.- 10,601,72 SYRIA t 50.4432,v 2;687.25 ,>750.-- 13,.252.15 2.687.25

Grand Total 4,650.-- 15,902.58 2,687.25 3,000.- 3,000.-- 30000O.-

20. Soon after the adoption of the Budect at thc Ninth Session, the Executive eoceotary notified to govermnents the amount of their contributions for 1955, as well as the date on which the contributions had to be paid. He sent from time to time reminders to governments which had not paid their con- tributions in due time. 21. Present Contracting Parties ll l governments which are now contracting parties have paid their con- tributions for the past financial years with the exception of Uruguay which has not yet miade any contribution to the expenses of the CONTA&CTING ARTIES since it acceded to the agreement. For the curront financial year, six page 9

governments have not yet remitted their contributions (as comparod with seven last year). The Executive Secretary has communicated with these governments in order to know the date on which their contributions would be available. Apart from the Chilean Governmont which has indicated that instructions had been given to remit its contribution, no reply has so far been received to the Executive Secretary's communication. 22. Contracting Parties having withdrawn from the Agreement No information is available regarding the payment of the contributions due by theso governments, IX OTHERAUfIISTRPMIMV âUrSTIONS

23. At its 504th Plenary meeting hold on 4 December 1954, tho General Assembly of the United Nations adopted the following resolution: "The General Assembly Approves tho amendmont of the Regulations of the United Nations 3oint Staff Pension Fund by the inclusion of a supplementary article as follows: SUPP1ENEMRY iMIIIE A The Interim Commission for the International Trade Organization For the purpose of these Regulations, the Interim Commission for the International Trade Organization shall bu treated as if it were a spocialized agency except that its representatives shall not have the right to vote in the United Nations Zoint Staff Pension Board and its Standing Coumittoe.'! 24. The Executive Socretary bas discussed with the secretariat of the Pension Board the toxt of a draft agreement for the admission of the ICIEO into the United Nations Joint Staff Pension HÙnd. In the course of this discussion it appeared that the transfer of the ICITO staff to a now organization whoso relations with the United Nations are still uncertain gave rise to ç number of practical problems. For that reason, it was folt proferable to postpono the consideration of the draft agreement until the Tenth Session of the CONTRCINQ PiMIMS. 25. On 30 Septoeber 1955, the IMITO bnd a staff of thirty-sevon officials and fourteen nationalities were represented on that staff. 26. The Executive Secrotary intends to continue the arrangements made with th United Nations Inspection Service for the auditing of the accounts for the fInancial year 1955. Points for decision: ParaGraph 7 Paragraph 15