(1)     At the 36th session (September 1972: CO-ORDINATION/R.960, paras. 4-21) CCAQ considered the problem of financing extra costs arising from appreciation of currencies in relation to the US dollar. It examined six possibilities:

     (a)     Payment of contributions in the form of Special Drawing Rights;

     (b)     Assessment of contributions in a "unit of account" related to the parity of the dollar to gold at the time of budget adoption;

     (c)     Payment of a given proportion of all assessed contributions in the currency of the host country;

     (d)     Use of a currency other than the US dollar both for budgets and for the payment of contributions;

     (e)     The principle that Member States should bear their share of the losses, and be credited with their share of any profits, arising from currency realignments;

     (f)     The establishment of a special reserve.

CCAQ concluded that once it had been decided to what extent increased costs due to currency changes could be absorbed by an organization, it remained to decide how best to arrange the necessary supplementary financing for the balance of the increased costs. There appeared to be three general possibilities:


  1. Funds could be accumulated in advance and used for this purpose in accordance with the relevant regulations or resolutions;
  2. Funds to meet the additional costs could be sought at the time needed, by means of supplementary estimates;
  3. Funds could be borrowed and repaid at a later date through receipts of arrears, supplementary financing or the normal budgetary process.

To the extent that the additional costs could be estimated prior to the adoption of the budget, CCAQ considered that they should be included in the estimates for approval by the appropriate bodies. There was no simple panacea which would solve the problem of additional costs arising from currency readjustments; they could be met only by such economies as were possible, by programme cuts and, when necessary, by supplementary financing. Organizations should therefore try to absorb such additional costs as far as possible by measures to achieve economy and improved efficiency. To the extent that the limits of absorption, including programme cuts, were exceeded, additional resources would have to be provided, either (a) from existing funds or reserves or special funds authorized or established for the purpose, (b) by supplementary estimates, or (c) by borrowing, with the necessary provisions being made for subsequent repayment.

(2)     At an ad hoc meeting in June 1973 (CO-ORDINATION/R.996) CCAQ discussed and revised a report by its secretariat on the effects of currency instability on the budgets of the organizations, and recommended that the revised document should be forwarded to ACABQ as a report from ACC. ACABQ reviewed the report and forwarded it to the General Assembly at its 28th session (A/9008, Add.16), with a recommendation that ACC should explore in greater detail the possibility of assessing contributions in a mix of currencies. The General Assembly decided to set up a Working Group consisting of thirteen representatives of Member States, and the Group began its work in February 1974.

(3)     At its 39th session (March 1974: CO-ORDINATION/R.1032, paras. 19-27) CCAQ suggested that ACC should await the outcome of the initial findings of the General Assembly's Working Group before acting on the ACABQ's recommendation for further studies on the possibility of a currency mix. It noted that the Swiss authorities had expressed reservations about the idea of assessing contributions partly in dollars and partly in Swiss francs.

(4)     At its resumed 40th session (October 1974: CO-ORDINATION/R.1054/Add.1, paras. 2-4) CCAQ, in the light of the attitude of the Swiss authorities and after considering the report of the General Assembly's Working Group, submitted a draft ACC statement proposing that the idea of assessing contributions in a mix of currencies should not be discussed further on an inter-agency basis, but that individual organizations with headquarters outside the USA and Switzerland should not feel precluded from continuing to study the question. The draft statement went on to outline various measures that might help to reduce the impact on programmes and budgets of the effects of inflation and currency instability.

(5)     At the 43rd session (March 1976: CO-ORDINATION/R.1146, paras. 48 and 49) the Committee discussed a UNESCO proposal concerning an indexation system for the payment of assessed contributions. The Committee noted that the organizations had continued to deal in their own way, and bearing in mind their particular problems, with the problems caused by monetary instability, no generally accepted solution having been found.

(6)     At its 50th session (March 1979) CCAQ agreed to conduct at its following session a formal review of the organizations' practices in dealing with the budgetary effects of currency instability (ACC/1979/R.11, paras. 20 and 21). In accordance with that decision, at its 51st session (September 1979) the Committee adopted a draft ACC statement on the budgetary effects of continuing currency instability (ACC/1979/R.69, para. 9 and annex III). After reviewing the previous system-wide attempts to deal with this problem and the practices adopted by the several organizations, this text called attention to the importance of the individual circumstances of the organizations as a factor in their choice of measures to take. Such measures were influenced not only by the effects of currency instability on the organizations, but also by considerations involving the volume and timing of their additional requirements, their general financial situation and their budgetary and financial practices and experience. Cases where the problem could be dealt with by arrangements capable of systematic and continuing application - such as reserve accounts or the earmarking of casual income - were of particular interest. More generally, ACC continued to believe that the dual objectives of protecting the programmes and budgets of the organizations, and of limiting recourse to supplementary estimates and assessments, must be firmly pursued. The text was subsequently approved (ACC decision 1979/27).

(7)     At the 52nd session (March 1980) the Committee noted a series of recommendations concerning budgetary and financial arrangements for meeting the effects of currency instability, formulated by the Panel of External Auditors in October 1979. The Panel had wished to encourage the organizations to adopt systems meeting the following main requirements:

     (a) The accounting system should permit identification of the extra costs or savings resulting from fluctuations in the rate of exchange between the dollar and the principal currency or, possibly, currencies of expenditure;

     (b)     The use of funds to meet the extra costs should be properly authorized and subject to budgetary control;

     (c)     Budgetary savings resulting from currency fluctuations should not be made available for an extension of programme activity unless otherwise directed by the supreme legislative body;

     (d)     Where separate currency-fluctuation accounts were maintained the organizations should be able to provide a breakdown of extra costs by budget heads (ACC/1980/16, para. 14).

(8)     At the 56th session (March 1982) it was agreed that any data needed from other organizations by UN in connection with a report on the effects of currency instability and inflation which was to be submitted at the 37th session of the General Assembly would be provided on request through the CCAQ secretariat (ACC/1982/6, para. 4). At the 57th session (September 1982) the Committee examined an initial draft of the UN report and reaffirmed its previous understanding concerning the parallel data that might be needed from other organizations (ACC/1982/25, paras. 4-6).

(9)     At the 64th session (March 1986) the Committee considered an updated version of the material submitted for its review in 1979 of organizations' practice in dealing with the budgetary effects of currency instability (see para. 6 above) (ACC/1986/4, para. 8). It was also provided with details on a "split assessment" system recently agreed upon in IAEA, which was intended to ensure that the right level of resources was provided for implementing the approved regular programme in spite of currency fluctuations. It was noted that these arrangements had been developed to deal with exchange-rate problems encountered where there were two main currencies of expenditure, and might be less suitable where there were more than two such currencies. The Committee expressed interest in seeing how the arrangements would function in practice and over time (ibid., para. 10).

(10)     At the 66th session (March-April 1987) the Committee had before it an outline of the IAEA split assessment scheme and was informed that although problems had initially been encountered with this scheme, experience during its first year of operation as a whole had been satisfactory (ACC/1987/6, para. 4).

(11)     During its exchange of information on the effects of currency instability at the 67th session (September 1987) the Committee was informed that a split-assessment scheme was to be introduced in UNIDO on a trial basis starting in the financial period 1988-1989. Attention also focused on the reduced programme capacity that resulted from continuing depreciation of the dollar under budgets denominated to that currency, except to the extent that the dollar remained stronger from other major currencies of expenditure or where supplementary financing had been made available in respect of higher dollar costs; the purchasing power of support-cost receipts in dollars had been similarly eroded (ACC/1987/12, paras. 5 and 6).

(12)     At the 68th session (March 1988) the Committee considered a request from the Panel of External Auditors that four recommendations which it had made in October 1979 on budgetary and financial arrangements to be followed by organizations to counter the effects of currency instability (see para. (7) above) should be once more brought to its attention. However, having re-examined the recommendations CCAQ found that the present situation was considerably more complex than the one in which they had been drawn up, and in a number of cases they might not now be applicable. It suggested that the Panel might wish to consider reviewing them in the light of the present circumstances of the different organizations (ACC/1988/5, paras. 5, 6).

(13)     At the same session the Committee noted that the depreciation of the US dollar was one of two main causes of current cash problems in the organizations. The most common measures to offset the effect of currency fluctuations continued to be programme adjustments and recosted or supplementary estimates. However, two organizations had recently denominated their budgets in the currency of their headquarters country, others had adopted or were envisaging split-assessment schemes and two were using future foreign exchange contracts to protect the purchasing power of income to be received (ACC/1988/5, paras. 29-33).

(14)     At the following (69th) session (September 1988) the Committee discussed the effects of currency instability as a factor in the current financial difficulties of the organizations. It noted a growing number of split-assessment schemes and increasing use of forward purchasing of currencies. It agreed that organization-by-organization data previously compiled for the Committee on measures to offset the effects of currency instability should be updated and resubmitted (ACC/1988/13, paras. 43-46; see also section 19.1).

(15)     At the 70th session (March 1989) the Committee noted that the organizations now appeared to have worked out, each according to its circumstances, appropriate measures to deal with the budgetary effects of currency instability; the measures used included the use of casual income earnings as well as those referred to in paragraphs (13) and (14) above (ACC/1989/7, paras. 43, 48).

(16)     At the 71st session (September 1989) the Committee observed that although most organizations' regular budgets were now or would soon be reasonably protected against currency instability, problems remained with respect to the purchasing power of US dollar income received for the support of extrabudgetary activities (ACC/1989/15, paras. 4, 5; see also section 20.2 for further discussion of this subject).