1. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/2016OAS Indirect Cost Recovery (ICR) Policy and Procedures (Ver. 1)1 Committee for Administrative and Budgetary Affairs (CAAP) Methodology for determining the scale of quota assessments of Member States

2. CAAP – Methodology for determining the scale of quota assessments of member states OAS vs. UN methodologies 5/27/20162 ■ Refers to the quota allocation methodology of the United Nations, with the incorporation of elements associated to the OAS. Methodology ComponentsOASUN Statistical base period: 6 y 3 years Income measure: Gross National Income Debt adjustment: Debt stock Low Per Capita income: Threshold: Median of Debt-Adjusted GNI Per Capita Average per capita GNI of all Member States Gradient: 80% Low Per Capita income adjustment: Below 30 th percentileBelow threshold Floor rate: 0.022%0.001% Maximum rate for Least Developed Countries: N / A0.010% Ceiling rate: 59.470%22% Limits for increases/decreases in assessments: Higher/lower than 25%N / A

3. CAAP – Methodology for determining the scale of quota assessments of member states Basic Parameters 5/27/20163 ■ The parameters considered in the calculation of the draft version of the OAS’ quota scale (See Attachment A-1 in the document: Elements of a draft scale of quota assessments, in percentage terms, for 2009 and beyond): ■ Source of information: United Nations (UN) and ECLAC. ■ Statistical base period: 2007 – 2012. ■ Income measure: Gross National Income (GNI). ■ Debt adjustment: Debt stock.

4. CAAP – Methodology for determining the scale of quota assessments of member states Basic Parameters (cont.) 5/27/20164 ■ Low Per Capita income: ▪ Threshold: Median of the debt-adjusted GNI Per Capita (6,179 @ 6 years and 6,438 @ 3 years). ▪ Gradient: 80% ▪ Low Per Capita income adjustment: Below 30th percentile (4,353 @ 6 years and 4,838 @ 3 years). ■ Floor rate: 0.022% ■ Ceiling rate: 59.470% ■ Limits for increases/decreases in Member States’ assessments: No higher/No lower than 25%

5. CAAP – Methodology for determining the scale of quota assessments of member states Methodology for determining the scale of quota assessments of Member States 5/27/20165 ■ The methodology is based on the arithmetic average of results obtained using national income data for base periods of three and six years for the periods 2007-2012 and 2010-2012. ■ Data was obtained through the World Bank’s website, and additional data was compiled using ECLAC’s annual reports.

6. CAAP – Methodology for determining the scale of quota assessments of member states Methodology for determining the scale of quota assessments of Member States 5/27/20166 ■ Steps for the calculation of the scale of quotas: ■ Step 1: GNI figures in US dollars are used to calculate shares of GNI for each Member State. The figures are averaged for each statistical based period of 6 and 3 years. See Attachment I. ■ Step 2: The debt adjustment for each year is deducted to derive the debt-adjusted GNI for each statistical base. Debt adjustment is equal to one-eight of total outstanding debt stock. See Attachment IV. ■ Step 3: Application of the low Per Capita income adjustment. This involves the calculation of the median debt-adjusted Per Capita GNI during each statistical base period. These figures are the thresholds for the low Per Capita income adjustments. See Attachment V.

7. CAAP – Methodology for determining the scale of quota assessments of member states Methodology for determining the scale of quota assessments of Member States 5/27/20167 ■ Step 4: The GNI of each country whose debt-adjusted Per Capita GNI was below the 30 th percentile is reduced by 80% (gradient) of the percentage by which its debt-adjusted Per Capita GNI is below the threshold. See Attachment VI. ■ Step 5: The total amount of the low Per Capita income adjustment is reallocated pro rata to Member States whose debt-adjusted Per Capita GNI was above the 30 th percentile, except the ceiling country. See Attachment VI. ■ Step 6: The minimum assessment rate, or floor (0.022%), is applied to those Member States whose rate is lower. Pro rata reductions are applied to all other Member States, except the ceiling country. See Attachment VII.

8. CAAP – Methodology for determining the scale of quota assessments of member states Methodology for determining the scale of quota assessments of member states 5/27/20168 ■ Step 7: Application of the maximum assessment rate, or ceiling (59.470%). Increases corresponding to the resulting reduction for the ceiling country are applied pro rata to other Member States, except those affected by the floor rate. See Attachment VII. ■ Step 8: An arithmetic average of the statistical base periods of 6 and 3 years is calculated for each Member State. See Attachment VII. ■ Step 9: Application of the maximum limits for increases/decreases in the Member States’ assessment, put forward at 25%. Corresponding increases/decreases are distributed pro rata among the Member States, except those affected by the floor and ceiling rates. See Attachment VIII.

9. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/20169 Methodology

10. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201610 Methodology ■ Step 1: GNI figures in US dollars are used to calculate shares of GNI for each Member State. The figures are averaged for each period of 6 and 3 years.

11. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201611 Methodology ■ Step 2: The debt adjustment for each year is deducted to derive the debt- adjusted GNI for each statistical base. Debt adjustment is equal to one-eight of total outstanding debt stock.

12. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201612 Methodology ■ Step 3: Application of the low Per Capita income adjustment. This involves the calculation of the median debt-adjusted Per Capita GNI during each base period. These figures are the thresholds for the low Per Capita income adjustments. Median (Threshold): 6.179 6.438

13. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201613 Methodology ■ Step 4: The GNI of each country whose debt-adjusted Per Capita GNI was below the 30 th percentile is reduced by 80% (gradient) of the percentage by which its debt-adjusted Per Capita GNI is below the threshold. Median (Threshold): 6.179 6.438 30 th percentile: 4.353 4.838

14. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201614 Methodology ■ Step 5: The total amount of the low Per Capita income adjustment is reallocated pro rata to Member States whose debt-adjusted Per Capita GNI was above the 30 th percentile, except the ceiling country. Median (Threshold): 6.179 6.438 30 th percentile: 4.353 4.838

15. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201615 Methodology ■ Step 6: The minimum assessment rate, or floor (0.022%), is applied to those Member States whose rate is lower. Pro rata reductions are applied to all other Member States, except the ceiling country.

16. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201616 Methodology ■ Step 7: Application of the maximum assessment rate (59.470%). Increases corresponding to the resulting reduction for the ceiling country are applied pro rata to other Member States, except those affected by the floor rate.

17. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201617 Methodology ■ Step 8: An arithmetic average of the statistical base periods of 6 and 3 years is calculated for each Member State.

18. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201618 Methodology ■ Step 9: Application of the maximum limits for increases/decreases in the Member States’ assessment, established at 25%. Corresponding increases/decreases are distributed pro rata among the Member States, except those affected by the floor and ceiling rates.

19. CAAP – Methodology for determining the scale of quota assessments of member states Scale of assessments 2012-2014

20. CAAP – Methodology for determining the scale of quota assessments of member states 5/27/201620 Annexes