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Scale of quota assessments of the Member States 2012-2014

Scale of quota assessments of the Member States 2012-2014. Secretariat for Administration and Finance. Summary. The scale methodology First three-year review of scale, following UN methodology, as adopted by GA in AG/RES. 1 (XXXIV – E/07)

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Scale of quota assessments of the Member States 2012-2014

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  1. Scale of quota assessments of the Member States2012-2014 Secretariat for Administration and Finance

  2. Summary The scale methodology First three-year review of scale, following UN methodology, as adopted by GA in AG/RES. 1 (XXXIV – E/07) Calculation of ability to pay is now automatic based on World Bank/IMF published data (GNI, external debt) Assessments determined by income, relative size of the economies, discounted for low-income countries and variations capped at 25% on level of previous scale 10/8/2014 2

  3. Scale of assessments 2012-2014

  4. Content Background Ability to pay Methodology Economic growth and scale of assessments 2012-2014 10/8/2014 4

  5. I Background 10/8/2014 5

  6. BASIS FOR DETERMINING QUOTA ASSESSMENTS Article 55 “The General Assembly shall establish the bases for fixing the quota that each Government is to contribute to the maintenance of the Organization, taking into account the ability to pay of the respective countries and their determination to contribute in an equitable manner” (emphasis added).

  7. The quota scale was frozen with the proposal to lower the maximum quota (United States). 1977-1990 The OAS is established. Charter mandates that contributions be based on the Member states’ capacity to pay. Is first applied in 1949. 1948 The OAS scale was calculated on the basis of the quotas assessed to OAS Member states at the UN 1949-1977 BACKGROUND

  8. New scales approved upon arrival of new members: Canada (1990), Belize and Guyana (1992) 1990’s CAAP considers several options for a new quota scale, based on the UN scale of assessments 1997-2006 BACKGROUND Member countries began to call for the need to review the scale in order to comply with the Charter (capacity to pay). 1996

  9. A group of experts convened by the Permanent Council discusses alternatives presented. A transitory scale for 2007-2008 is adopted pending deliberation of a final proposal. 2006 First period under which a quota scale calculated under the approved methodology becomes effective 2009-2011 BACKGROUND General Assembly reaches a consensus on a methodology for calculating the scale and approves it in a special session in resolution AG/RES. 1 (XXXIV-E/07) 2007

  10. II Ability to Pay 10/8/2014 10

  11. “Ability to pay” • The basis for measuring • Size of the economy (Gross National Income) adjusted for: • Total external debt • Per capita income • Application of floor and ceiling rates • Quota growth/decline capped at 25% of previous period 10/8/2014 11

  12. III Methodology 10/8/2014 12

  13. The Data • GNI data for base periods of 6 and 3 years for the periods 2003-2008 and 2006-2008. • Obtained through the United Nations website and Annual Statistical Reports published by the ECLAC. • External debt data: The World Bank’s Global Development Finance 2011 and ECLAC reports 10/8/2014 13

  14. Methodology 10/8/2014 14

  15. 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. 10/8/2014 15

  16. 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. 10/8/2014 16

  17. 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. 10/8/2014 17

  18. Methodology • Step 4: The GNI of each country whose debt-adjusted Per Capita GNI was below the 30th percentile is reduced by 80% (gradient) of the percentage by which its debt-adjusted Per Capita GNI is below the threshold. 10/8/2014 18

  19. 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 30th percentile, except the ceiling country. 10/8/2014 19

  20. 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. 10/8/2014 20

  21. 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. 10/8/2014 21

  22. Methodology • Step 8: An arithmetic average of the statistical base periods of 6 and 3 years is calculated for each Member State. 10/8/2014 22

  23. 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. 10/8/2014 23

  24. IV Economic growth and scale of assessments 2012-2014 10/8/2014 24

  25. Economic Growth 2003-2008

  26. Economic Growth 2003-2008

  27. Economic Growth 2003-2008

  28. Explaining changes to the scale of assessments • Economic growth may explain, in most cases, increases or decreases to a member state’s quota • Even though a member state may have experienced growth, its overall quota may be reduced if the relative size of the economy is less than the previous quota (e.g. Argentina) • Large increases to major contributors tend to “crowd out” or diminish the relative size of others and contribute to their reduction (e.g. Brazil and Mexico grow while Canada sees a reduction) • Caps on growth or reductions will affect the contributions of other member states due to the redistribution of excess percentages 10/8/2014 28

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