8/28/081 CAAP BASICS and CRITICAL ISSUES GENERAL SECRETARIAT OF THE OAS

8/28/082 CAAP Basics Whos Who What does CAAP do? Basic Documents Budget Structure 2009 – 2010 Challenges: 2009 Program-Budget Proposal 2010 and Beyond Critical Issues: CAAP Agenda for 2008

8/28/083 Whos Who Permanent Council Article 91 of the Charter of the OAS grants it responsibility for administrative oversight of the GS/OAS. Acts as the Preparatory Committee of the General Assembly. CAAP Established pursuant to Article 19 of the Rules of the Permanent Council. Reviews administrative and budgetary matters referred to it by the PC and/or the General Secretariat. Reports to the PC on its findings. Serves as a Subcommittee of the Preparatory Committee.

8/28/084 Whos Who (cont.) General Secretariat Secretariat for Administration and Finance (SAF): Technical Secretariat to the CAAP. Secretariat to the GA, Meeting of Consultation, the Permanent Council and Subsidiary Organs: Committee Secretary. Department of Legal Affairs and Services: Legal advisor to CAAP.

8/28/085 What does CAAP do? Examines, discusses, evaluates and makes recommendations to the Permanent Council on administrative and budgetary matters referred to it by the PC and/or General Secretariat (GS/OAS). Reviews periodic financial and administrative management reports submitted by the GS/OAS. Follows-up on the implementation of mandates and administrative measures required by the PC or the GA.

8/28/086 Basic Documents Legal Framework, Mandates: Charter of the OAS. General Standards to Govern the Operations of the GS/OAS. Budget resolutions AG/RES (2008 budget ) and AG/RES (2009 budget guidelines), other resolutions from previous years. Additional Key Documents: Proposed Program-Budget of the Organization for 2009 (March 2008). Quarterly Resource Management Reports, Financial Statements, and other CAAP documents issued in 2007/08.

8/28/087 Annual OAS Management Cycle: Annual Audit, RF Program-Budget and Quarterly Reports aligned to CAAPs Agenda Jun 30 Mar 31 1 st Quarterly Report 2 nd Quarterly Report Sep 30 3 rd Quarterly Report Dec 31 | Jan 1 Publication of Annual Audit of Accounts Phase 2 SAF inputs budget Information Phase 1 Program-Budget formulation and planning Phase 6 Publication and distribution of the Budget by no later than 60 days after approval Phase 5 (Jun 1 – Jun 6) Approval of Program-Budget by the GA Phase 4 Discussion and review by CAAP and recommendation to the Preparatory Committee 15 days prior to GA Phase 3 Budget analysis, preparation and presentation 90 days prior to GA Publication of RF Program- Budget Year-round financial planning and performance assessment Preliminary Audit of Accounts (SEP to OCT) Audit of Accounts (JAN to APR) Report from the Board of External Auditors (end of APR) Legend Annual Audit RF Program-Budget Quarterly Reports

8/28/088 Chapter / Program Corresponds to a major organizational unit or program within the overall framework of the General Secretariat. Subprogram Corresponds to a specialization within the scope of activities defined for a program. Project Constitutes the basic unit for budget planning and is the level of greatest detail in the program budget. PROGRAM-BUDGET STRUCTURE

8/28/089 Chapters / Programs 1. – Secretary General 2. – Assistant Secretary General 3. – Autonomous and/or Decentralized Entities 4. – Secretariat for Legal Affairs 5. – Secretariat for Multidimensional Security 6. – Secretariat for Political Affairs 7. – Executive Secretariat for Integral Development 8. – Secretariat for External Relations 9. – Secretariat for Administration and Finance Basic Infrastructure and Common Services PROGRAM-BUDGET STRUCTURE (cont.)

8/28/0810 Objects of Expense 1. – Approved posts, temporary and overtime 2. – Non recurring personnel expenses 3. – Fellowships 4. – Travel 5. – Documents 6. – Equipment and Supplies 7. – Buildings and Maintenance 8. – Performance Contracts 9. – Other Costs PROGRAM-BUDGET STRUCTURE (cont.)

8/28/0811 Types of Funds Regular Fund Operating Subfund Reserve Subfund Voluntary Fund (FEMCIDI) Specific Funds, e.g. OAS DEMOC Spain Canada Mexico Trust Funds, e.g. Retirement and Pension Medical Benefits Leo Rowe Revolving Funds (Internal accounts) e.g. Administrative and Service Funds Treasury Fund

8/28/0812 Regular Fund Funded by the obligatory quota payments of the Member States to finance the operations of the General Secretariat. Operating Subfund Records all income, obligations and expenditures of the approved Regular Fund budget. Reserve Subfund Records year-end balance of operating activity. Designed to meet the expenditures of the General Secretariat pending receipt of quota and other income. Types of Funds (cont.)

8/28/0813 Voluntary Fund (FEMCIDI) Funded by voluntary contributions (pledges) of the Member States to finance the activities of the Inter-American Council for Integral Development. Specific Funds Funded by donor contributions designated for specific activities or projects according to an agreement between the donor of funds and the General Secretariat. Trust Funds Funds established by a donor to fund purposes and activities specified by the donor in the trust instrument and must be used for the benefit of those activities or persons specified in the trust agreement. Types of Funds (cont.)

8/28/0814 Revolving Funds Established to account for internal operations originating from the execution of approved activities. Administrative Service Funds Created to record transactions for services such as parking, long distance telephone, rental maintenance, ICR, tax reimbursement. Treasury Fund All the cash available for use in carrying out the activities of the various funds of the OAS, except those funds that the Permanent Council specified should be deposited in a separated bank account. Available cash is consolidated in the Treasury Fund for more efficient and effective cash management of those financial resources Types of Funds (cont.)

15 Critical Issues: CAAP Agenda for Aug-Dec 2008

8/28/ Proposed Program-Budget 2009 Indicative Figures

8/28/ Budget: Ceiling and Financing 2008 approved and proposed 2009

8/28/ Proposed Program-Budget Assumptions Adherence to the SGs commitment, stated on June 5, 2006 in Santo Domingo, to present throughout his administration a proposal that protects the purchasing power of the budget but maintains a zero real growth rate. The 2009 Budget ceiling is being proposed at $90.1 million, only 3% over the 2008 Approved Budget ceiling. Object 1 (personnel) has been set to $58.0 million, equivalent to 64.38%, pursuant to AG/RES (XXXVII – O/07). Compared to the 2008 Approved Budget, this represents an increase of $2.2 million resulting principally from statutory increases (post adjustment, health insurance).

8/28/ Proposed Program-Budget Assumptions (cont.) Objects 2-9 (non-personnel) have been adjusted to $32.1 million. Compared to the 2008 Approved Budget, the non-personnel budget proposal represents an increase of $436.0 thousand to accommodate inflationary increases (e.g., electricity, fuel, travel). Statutory increases to personnel costs are based on the following: A 4% increase for professional staff and 3% for General Services staff in These estimates are based on the trend of the increases granted by the UN in recent years. Increases to objects 2-9 costs have been capped in the 2009 proposed program-budget at 1.3%.

8/28/0820 Summary of Decisions To-date and Next Steps ACTIONS TAKEN MARCH – JUNE 2008: CAAP reviewed the 2009 Program-Budget Proposal and drafted the 2009 Budget Resolution. No changes were made to the proposed itemized budget figures. Medellín GA approved the Guidelines for the 2009 Program-Budget AG/RES (XXXVIII-O/08). AUGUST- SEPTEMBER 2008 CAAP recommends budget expenditure ceiling and financing sources. CAAP presents report to the Permanent Council/PrepCom by mid September. PrepCom convenes the XXXVI Special Session of the General Assembly by no later than 9/30/08. By September 30, Special GA approves 2009 budget and its financing.

8/28/ and beyond Pursuant to resolution AG/RES (XXXVIII-O/08), the Permanent Council is required to convene a special session by Dec. 15, to consider the recommendations of the Board of External Auditors … in regards to the need for a periodic adjustment of quota income to the Organizations expenditure level, as well as to convoke prior to 31 January 2009, a Special Session of the General Assembly to adopt, as appropriate, those decisions that may be required. In this context: The SG is committed to maintaining budget growth target of 3% annually. Inflationary pressures and a weak US $ are likely to test the limits of targeted growth rate: US inflation at 5.6% for the 12-month period ending July US dollar posting losses against major currencies. Statutory increases to salaries and inflation have been eroding the purchasing power of the budget. Improved quota collections have reduced the arrears of prior periods which have contributed to finance the budgets up to Starting in 2010, the gap of $8.0 million needs to be closed by a one-time quota increase, a one time program reduction or a combination of both. CP20924E