1 PROGRAM-BUDGET FOR 2012 Financing Proposal

22 Purpose Contribute a few ideas to the talks of the Member States on two topics specific to the 2012 Regular Fund Program-Budget: The 2012 Regular Fund Budget global level, and The Quota Assessment level to finance the 2012 Regular Fund Budget.

33 The GA will fix the budget ceiling and the quotas in San Salvador A Special General Assembly will meet on/about October 31, 2011 to approve the 2012 Regular Fund Program-Budget. Delivery of the proposed 2012 Program-Budget to the Permanent Council on/about July 31, 2011, based on the San Salvador GA budget guidelines. Submission of a first draft of a results-based budget for the OAS Steps

44 Chronic imbalances between fixed income and growing expenditures. No increases, in real terms, to the budget of the Organization since Annual quota adjustments needed to cover inflation. Moderate increases in three of last six years were insufficient to cover the gap between income and expenses Adjustments for inflation and a growing list of mandates have exhausted resources from quotas in arrears. Widening structural financial gap has not been closed since Budget 2011 reduced by $5 million from 2010 levels. Sixty separations from service and the elimination of 45 RF posts required in 2010 to meet 2011 budget constraints. Present Situation of the Regular Fund

55 Personnel reductions led to shifting of posts to minimize impact on priority areas. Separations carried out over a span of six months in coordination with Secretaries and Directors. None resulted in complaints before TRIBAD Adjustments in 2010 allowed 2011 budget to fund approved number of posts; however, without further cuts in personnel spending, recent salary adjustments required under UN parity would cause personnel expenditures to exceed budget funding in Current Situation (cont.)

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77 An additional $1.4 million in personnel expenditures must be reduced to stay within the 64% threshold, New cuts of 20 posts will be taken out of the RF and staff will be transferred to Specific Funds or ICR. More than 250 posts have been cut out of the Regular Fund since Need to reduce mandates in order to reduce costs. Current Situation (cont.)

88 In 2010, RF resources account for less than 50% of total Donors not operating under unified international cooperation mechanism poses challenges to planning of activities. Significant progress with Canada and Spain. Relying on funding from donors affects long-term priority-setting process. Must strengthen Regular Fund to meet GA mandates. Specific Funds

99 Multiple studies point to the need to maintain and repair buildings and grounds of the Organization. Options have been presented. Decisions needed. Approval required for sale of Casa del Soldado. Proceeds would finance urgent repairs to Main Building and Constitution Avenue complex. Real Property

10 Board of External Auditors strongly urged “hard decisions” to align quotas and expenditure budget. Expenditure Budget: – Budget level 2012: $87.9 million Financed by: – Net income from quota assessments of $83.1 million (including $0.4 million in prompt payment discounts) – Administrative support to Specific and Voluntary Funds $2.6 million – Other income $2.2 million Budget Proposal 2012 – Conclusions and Recommendations

11 Projected Personnel Increases

12 Increases of 3% to 2011 budget and quota levels. Consensus on principle of quota-setting linked to statutory and inflationary increases in expenditures. Challenges will remain: – Lack of a Regular Fund reserve, high reliance on specific funds, and deferred maintenance of OAS real property Budget Proposal 2012 – Conclusions and Recommendations (cont.)

13 Increases of 3% to 2011 budget and quota levels. Budget: Quotas: 13 Increases to Budget and Quota Levels Approved budget % = Budget 2012 Budget 2012 = $85,349,300 + $2,560,500 = $87,910,300 3% of Budget 2011 = $85,349,300 x 3% = $2,560,500 AG05258