1. 1 Programming Arrangements for UNDP Regular Resources Informal Consultations with the Executive Board 02 June 2005

2. 2 For Discussion For Discussion Overview of Programming Arrangements Overview of Programming Arrangements TRAC-1 Calculation Methodology TRAC-1 Calculation Methodology Midterm Recalculation Midterm Recalculation

3. 3 Programming Arrangements Programming Arrangements Sets the legal framework, as well as the principles and parameters, for the distributions of UNDP core programme resources.

4. 4 Principles and Legal Framework Decision 2002/18 Decision 2002/18 (Programming Arrangements for the period 2004-2007) Reaffirms principles of eligibility of all recipient countries Reaffirms principles of eligibility of all recipient countries Recognizes principles of progressivity, impartiality, transparency, and predictability of flow of resources Recognizes principles of progressivity, impartiality, transparency, and predictability of flow of resources Reconfirms importance of annual funding target of $1.1 billion Reconfirms importance of annual funding target of $1.1 billion Reconfirms TRAC distribution methodology Reconfirms TRAC distribution methodology Confirms that the amount of regular resources available for programming for any given year is equal to: Confirms that the amount of regular resources available for programming for any given year is equal to: Amount of regular income minus: Amount of regular income minus: Amount allocated for the biennial support budgetAmount allocated for the biennial support budget Other amount set aside by the EB for other purposesOther amount set aside by the EB for other purposes

5. 5 Programme resource allocation framework 2004-2007 Programme - Fixed Lines Human Development Report (HDR)$5.3Human Development Report (HDR)$5.3 Office of Development Studies (ODS) 1.1Office of Development Studies (ODS) 1.1 Economist Programme 4.5Economist Programme 4.5 Development Support Services (DSS) 6.0Development Support Services (DSS) 6.0 Support to Resident Coordinator 13.5Support to Resident Coordinator 13.5 Evaluation 2.5Evaluation 2.5 South-South Cooperation (formerly TCDC) 3.5South-South Cooperation (formerly TCDC) 3.5 Subtotal – fixed lines$36.4 Subtotal – fixed lines$36.4 Programme - Variable Lines TRAC 1.1.147.3%TRAC 1.1.147.3% TRAC 1.1.231.5TRAC 1.1.231.5 TRAC 1.1.3 7.2TRAC 1.1.3 7.2 Regional programmes 9.0Regional programmes 9.0 Global programmes 5.0Global programmes 5.0 Subtotal – variable lines 100.0% Subtotal – variable lines 100.0%

6. 6 Target resource assignment from the core (TRAC) TRAC 1.1.1 Assigned immediately to programme countriesAssigned immediately to programme countries Regional share determined by total TRAC 1.1.1 earmarkings for countries in the regionRegional share determined by total TRAC 1.1.1 earmarkings for countries in the region TRAC 1.1.2 Assigned to programme countries based on performanceAssigned to programme countries based on performance Regional share is the same as TRAC 1.1.1Regional share is the same as TRAC 1.1.1 TRAC 1.1.2 assigned as a percentage of TRAC 1.1.1 (0 to 100%)TRAC 1.1.2 assigned as a percentage of TRAC 1.1.1 (0 to 100%) TRAC 1.1.3 Facility was established with the view to provide the Administrator with a capacity to respond quickly and flexibly to the development needs of countries in special circumstances

7. 7 TRAC-1 Methodology Principles underlying the TRAC-1 distribution methodology Focus on low-income and least developed countries;Focus on low-income and least developed countries; Progressivity in favour of lower-income countries within the categories of, respectively, low-income and middle-income countries;Progressivity in favour of lower-income countries within the categories of, respectively, low-income and middle-income countries; A gradual move to net contributor country (NCC) status for countries that achieve higher GNI levels.A gradual move to net contributor country (NCC) status for countries that achieve higher GNI levels.

8. 8 TRAC-1 Methodology Parameters Low Income Country (LIC) GNI per capita threshold: $900 (67 countries)Low Income Country (LIC) GNI per capita threshold: $900 (67 countries) Middle Income Country (MIC) GNI per capita range between $900 and $4700 (73 countries)Middle Income Country (MIC) GNI per capita range between $900 and $4700 (73 countries) Net Contributor Country (NCC) GNI per capita threshold greater than $4700 (26 countries)Net Contributor Country (NCC) GNI per capita threshold greater than $4700 (26 countries) Least Developed Country (LDC) floor 60% of total resourcesLeast Developed Country (LDC) floor 60% of total resources LIC resources range – between 85% to 91% of total resourcesLIC resources range – between 85% to 91% of total resources Floor Principle – protects country TRAC-1 from a drastic drop from increased GNIFloor Principle – protects country TRAC-1 from a drastic drop from increased GNI Minimum TRAC – $350,000 per year country minimum and “cluster” minimum for multi-country officesMinimum TRAC – $350,000 per year country minimum and “cluster” minimum for multi-country offices

9. 9 TRAC-1 Methodology Calculation Step 1: Calculate GNI per capita and population weights. Add an extra weight for LDCs and LICs Add an extra weight for LDCs and LICs Step 2: Determine the country’s basic share in the total resource pool resource pool Step 3: Make certain basic TRAC 1.1.1 does not go below floor mandated by EB floor mandated by EB Step 4: Make sure that calculated TRAC-1 above does not go below minimum TRAC-1 below minimum TRAC-1

10. 10 Midterm Recalculation Rationale Executive Board 2002/18 calls for a midterm recalculations of TRAC-1Executive Board 2002/18 calls for a midterm recalculations of TRAC-1 Initial calculation for the period 2004-2007 based on agreed distribution methodology using 2001 World Bank Atlas gross national income (GNI) per capita and population.Initial calculation for the period 2004-2007 based on agreed distribution methodology using 2001 World Bank Atlas gross national income (GNI) per capita and population. The present recalculation is based on the 2003 World Bank Atlas gross national income (GNI) per capita and population.The present recalculation is based on the 2003 World Bank Atlas gross national income (GNI) per capita and population. The recalculated TRAC-1 earmarkings will replace the initial TRAC-1 earmarkings for the remaining two years of the programming period (i.e., 2006/2007).The recalculated TRAC-1 earmarkings will replace the initial TRAC-1 earmarkings for the remaining two years of the programming period (i.e., 2006/2007).

11. 11 Midterm Recalculation Approach First time a full comprehensive recalculation is done within a programming period.First time a full comprehensive recalculation is done within a programming period. Based on the same methodology approved in decision 2002/18.Based on the same methodology approved in decision 2002/18. Based on 2003 GNI per capita and population.Based on 2003 GNI per capita and population. Similar to the initial calculation, recalculation is based on $450 million regular programme resources.Similar to the initial calculation, recalculation is based on $450 million regular programme resources.

12. 12 Midterm Recalculation Results A large number of countries reflect potential increases or decreases mainly because of a change in the GNI base from 2001 to 2003.A large number of countries reflect potential increases or decreases mainly because of a change in the GNI base from 2001 to 2003. In the past, intra-period adjustments were made based on the same GNI base year (i.e., 2001 GNI).In the past, intra-period adjustments were made based on the same GNI base year (i.e., 2001 GNI). New calculations were only done inter-period, where countries were allowed to get a lower TRAC-1 from one period to another.New calculations were only done inter-period, where countries were allowed to get a lower TRAC-1 from one period to another. Countries moved between income categories:Countries moved between income categories: 6 countries moved from LIC to MIC (Armenia, China, Djibouti, Honduras, Sri Lanka and Ukraine) 6 countries moved from LIC to MIC (Armenia, China, Djibouti, Honduras, Sri Lanka and Ukraine) 1 country moved from MIC to LIC (Bolivia) 1 country moved from MIC to LIC (Bolivia) 1 country moved from NCC to MIC (Venezuela) 1 country moved from NCC to MIC (Venezuela) 3 countries became new NCCs (Croatia, Poland and Slovak Republic) 3 countries became new NCCs (Croatia, Poland and Slovak Republic)

13. 13 Midterm Recalculation Options  Option 1 – based on full recalculation, considered both increases and decreases: Total of 101 changes. Total of 101 changes. 39 countries getting TRAC-1 increases (all LICs except 1 MIC). 39 countries getting TRAC-1 increases (all LICs except 1 MIC). 62 countries getting decreases (mostly MICs). 62 countries getting decreases (mostly MICs). $9.6 million TRAC-1 shifted to countries eligible for TRAC-1 increases. $9.6 million TRAC-1 shifted to countries eligible for TRAC-1 increases. TRAC-1 increases went to countries with absolute GNI increases, decreases, or no GNI changes. TRAC-1 increases went to countries with absolute GNI increases, decreases, or no GNI changes.  Option 2 – derived directly from option 1, but only considers TRAC-1 increases (net resources required is $8.2 million). All countries either maintained their initial TRAC-1 earmarkings or received TRAC-1 increases.

14. 14 Midterm Recalculation Recommendation – Option 2 Basis: Need to maintain principle of progressivity and predictability of programme resource flows, especially to low income countries.

15. 15 United Nations Development Programme