Sixty-second Regional Committee for Europe: Malta, 10–13 September 2012: predictability, flexibility and sustainability of WHO’s financing

RC 62: Working Groups on Reform Predictability, flexibility and sustainability of WHO’s financing Objective and Outcome The objective of the Working Group discussions on Predictability, flexibility and sustainability of WHO’s financing will be used as structured input to the extraordinary session of the PBAC, meeting in Geneva on 6-7 December 2012, and through the PBAC to the 132nd session of the Board. A Summary Report of the Working Group deliberations and subsequent plenary discussion will be prepared for referral to DGO/HQ, in addition to the regular report of the RC proceedings. The Summary Report will act as an Inf. Doc. and as a resource paper for members of the PBAC. Background Reforming the way WHO is financed has been the major driver of the current reform. While reform has become broader and now touches upon virtually all aspects of WHO’s operations, financing issues remain at the core of the issues which the Member States and the Secretariat will still need to address. Among the financial issues at hand, (i) predictability of funding, (ii) its flexibility and (iii) funding priorities as defined by Member States at the World Health Assembly among the most important issues. In terms of predictability the situation is not as bad as generally considered, as summarized below. Chart 1. PB 2012-13: preliminary financing of approved budget all offices, all segments, as at 1 January 2012 The above chart shows that on January 1 2012, already USD 2.5 billion (or 62.5%) was available and allocated. The other key issue linked to WHO financing relates to the flexibility of funds. The total resources in 2010-2011 available for Base programmes implementation amounted $2,472 million. Available resources Assessed contributions 934 CVCA 235 55% AS/PSC (Exp) 196 Other VC 1, 107 45% Total 2, 472 100% This means, 55% of the Base programme expenditures could be covered by funds controlled by the Secretariat, which are flexible, reasonably predictable, and sustainable in that there is not much change from one biennium to the other. So, 62.5 % of the funds are predictable and 55% are actually flexible. In spite of that relatively positive outlook at the macro level, there are significant imbalances in resourcing and implementation across Strategic Objectives and Major Offices, as well as frequent difficulties in financing staff costs. As far as WHO’s donors are concerned, there were 416 different contributors of voluntary funds to WHO (each providing $10 thousand or more) in 2010-2011. However, three contributors – Bill and Melina Gates Foundation, USA, and UK provided 40% ($1,2B) of all the voluntary contributions. It took an additional 15 contributors to provide the next 40% of resources, i.e., up to $2.3B. Further, 13 contributors provided the next 10%, i.e., up to $2.6B This means that only 31 contributors provide 90% of all the voluntary funds. Of these, in addition to the European Union, 12 are individual Member states of the WHO European region, 6 are Member States of other WHO regions, and 11 are UN organization, funds or private foundations. If one looks over the years, one will find that these contributors are quite stable with Gates steadily climbing the ladder and now at the top. These contributors provide by and large similar amounts for similar purposes biennium after biennium –so large parts of the Organization’s VC is also quite predicable. Of the 14 Member state contributors to the Core Voluntary Contributions Account (CVCA), all but one (Australia) are from Europe. Collectively, these 14 Member states provide 32% of their funding through the CVCA mechanism, while more than two-thirds of their contributions remain specified. The level of CVCA has not changed in the last biennium and we have probably reached a plateau – unless something changes externally or internally. The Programme Budget is not approved by the WHA, which only takes note of it. However, Member State Assessed contributions are appropriated by the WHA in ‘sections’ in the Appropriation Resolution adopted by the Assembly. The number of sections has varied over time – currently it is by the 13 Strategic Objectives. However, the Appropriation Resolution only relates to Assessed Contributions, or what in the past was referred to as the Regular Budget. The adoption of the Appropriation Resolution is therefore made without knowledge of the overall funding situation. The appropriations (by sections) are then split by the Director-General over the seven Major Offices, again without knowing /considering the total funding situation and finally allocations are made by each Major Office to individual budget centres, including country offices and programmes. This splitting and allocation are mostly historically driven by an inherent ‘right-to’ perspective and the Assessed Contributions end up early in the biennium parcelled out in hundreds of small envelopes that are vigorously protected by their ‘owners’. Thus, the way that the Assessed Contributions are governed and managed result in them adding to rather than reducing the resource imbalances across the Programme Budget Working Group set-up In order to provide input and guidance to the extraordinary meeting of PBAC scheduled for 6-7 December 2012, there will be two Working Groups, both discussing issues related to the above situation. Various options were considered in this regard, and other themes were also considered for inclusion, as indeed reflected in document EUR/RC62/14, para. 58. However, due to the heavy agenda of the Regional Committee and the time pressure to conclude all business within 4 days, only 1 ½ hour could be set off for the Working Groups on reform. As the issue of predictability, flexibility and sustainability of WHO’s financing remains on the top of the agenda of most European Member States, it was felt preferable to concentrate on this key issue, rather than fragment the discussion into other topics, with the additional time this would have necessitated. Member States are free to choose which Group to attend, and there will be full interpretation services in both Groups. Group A, which will meet in the Plenary Hall, will be chaired by Udo Scholten, Mr Germany, with Maksut Kulzhanov, Kazakhstan …………………………….. asas Rapporteur. This Group will be supported by the Secretariat by Erik Blas and Hans Kluge Group B, which will meet in Room Pinto, will be chaired by Mr Björn-Inge Larsen, Norway, with Ms Dessislava Dimitrova as Rapporteur. This Group will be supported by the Secretariat by Imre Hollo and Helge Larsen. Issues The following issues are only suggestions from the EURO Secretariat, put forward with the purpose of stimulating the discussion in the Working Groups. Member States are of course free to raise any other issue they deem relevant in relation to the funding background described above: • To the extent that large portions of Voluntary Contributions can in fact be predicted, based on key donors’ past performance, would a mapping of expected funds against recipient programmes be useful for MS? • What would it take for the providers of specified voluntary contributions to indicate (before the Programme budget is passed by the WHA) how much and where their resources will land? • What would it take for the contributors to the CVCA to provide a larger part [or all] of their resources through this or a similar mechanism? • As part of MS’ governance of WHO, should predicted funding streams – which would be likely but not certain - be included in a future Programme Budget approval resolution? • To what extent would a shifting of the financial year further improve the overall predictability of WHO’s voluntary funding? • What would be the negative consequences of implementing such a shift? • What practical options exist for increasing Assessed Contributions on MS? • What would it take for the Member states to allow the Secretariat to flexibly manage the Assessed Contributions to ensure a balanced funding across all categories? ***