QUOTAS OF MEMBER STATES TO THE REGULAR FUND

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QUOTAS OF MEMBER STATES TO THE REGULAR FUND
Office of Budgetary and Financial Services
September 1, 2005
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CONTENTS

• BASIS FOR DETERMINING QUOTA ASSESSMENTS
• BACKGROUND
• POINTS OF CONSENSUS
• TO GET A NEW QUOTA
• CURRENT PROPOSAL
• IMPACT OF PROPOSAL
• WHERE WE ARE
• CONCERNS AND OPTIONS

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BASIS FOR DETERMINING QUOTA ASSESSMENTS
Article 55 The General Assembly shall e
stablish 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).
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BACKGROUND
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BACKGROUND
Member countries began to call for the need to
review the scale in order to comply with the
Charter (capacity to pay).
1996
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DISTORTIONS HAVE BUILT UP OVER TIME
Whereas the UN regularly updates its scale of
assessments based member states capacity to pay,
the OAS has not done so since 1977. Countries
that are ranked at the same level in the UN often
have very different quotas in the current OAS
scale, and vice versa. For example
?
Both pay same quota
Nicaragua and Guyana.
Nicaragua is 3 ½x that of Guyana
?
El Salvador is 7x that of Haitis
Both pay same quota
Haiti and El Salvador.
Chile is 30 Higher than Venezuelas
Venezuela is 6x that of Chile
?
Venezuela and Chile.
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POINTS OF CONSENSUS
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TO GET TO A NEW QUOTA SCALE
Establish a maximum quota
Establish a minimum quota
Determine the intermediate values by way of a
mathematical relation (quotas of all 35 member
states should add up to 100)
Prepare a resolution for approval of the new
quota scale at the Special General Assembly
If an agreement on a quota scale is not reached,
repeat steps 1, 2 and 3
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EXAMPLE
?
Maximum quota 59.470 - United States
?
Minimum quota 0.020 (Member States paying 0.0
01 would pay 0.020 at the OAS)
Values for minimum and maximum quotas are
strictly political decisions agreed upon by the
member states
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EXAMPLE
?
The mathematical relation could be as simple as
applying a proportionality constant to the
intermediate member states
OASquota UNquota x 4.951
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WHERE WE ARE

• Latest proposal considered CP/CAAP-2673/03 rev.
  1 February 25, 2005
  
• The member states have raised the following
  concerns regarding prior proposed quota scales
  
• Complex formulas with too many arbitrary
  parameters
  
• Proposal to have a new scale with no reductions
  in current assessments
  
• Use the latest data from the UN to update the
  scale
  
• A CAAP-approved scale must be ready for the
  Special GA tentatively scheduled for November
  December 2005

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ARE THERE OTHER (SIMPLER) FORMULAS?
Yes, at least three other methodologies have been
proposed and considered by CAAP since 1998

• The Traditional Method
• Sets a ceiling (59.47), a floor (0.05 for
  countries whose UN assessment is 0.008 or
  lower), and redistributes intermediate quotas in
  proportion to their UN assessments.
• An Alternative Method
• Sets a ceiling (59.47), a floor (0.05 for
  countries paying the minimum at the UN), and
  redistributes intermediate quotas using a simple
  exponential relation.
• A Hybrid Method
• Sets a ceiling (59.47), a second ceiling for the
  second largest contributor (14 was proposed), a
  floor (0.05 as above), and redistributes
  intermediate quotas using a simple exponential
  relation

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RECONSIDERING YOUR OPTIONS
Previous methodologies were not necessarily
inferior, but had some drawbacks as well as
advantages. All three shared some common
characteristics with the one presented in
CP/CAAP-2673/03 rev. 1

• Resulting scales do not differ significantly
• Variations are found in the computed percentages,
  but not on the rankings
  
• They all require defining some arbitrary
  variables, which have to be agreed upon by the
  member states (political decisions)
  
• The most significant way to affect percentages is
  to change either the maximum or minimum quota

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NO REDUCTIONS IN CURRENT ASSESSMENTS?

• To obtain a scale that would not result in a
  reduction in assessments, the total quota
  contribution of all member states would have to
  be substantially raised.
• However, all quota reductions are always offset
  by an equal increase to other contributors, so
  that the net aggregate variation for all member
  states is always zero
• Fluctuations in quotas are inevitable, but they
  are also transitory
  
• The UN continuously reviews its methodology to
  determine the member states capacity to pay

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How often will the scale be updated?

• UN scales are adjusted every three years.
• The current scale is effective for the 2004-2006
  triennium. The next one should be approved in
  late 2006 for the 2007-2009 period.
  
• Since the UN scales are not known until after the
  OAS General Assembly has taken place, new OAS
  scales will always lag one year behind those of
  the UN.

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OAS SCALES WILL HAVE A ONE-YEAR LAG
UN SCALE (Approved late in the last year of cycle
)
OAS SCALE (Approved in the following June)
2005-2007
2004-2006
2008-2010
2007-2009
2011-2013
2010-2012
CP15220