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Abstract
Journal of Official Statistics, Vol.18, No.3, 2002. pp. 481510

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A Study on the Formulation of an Assessments Scale Methodology: The United Nations Experience in Allocating Budget Expenditures Among Member States

Abstract:
The article discusses the evolution and continued development of an assessment scale methodology that systematically apportions U.N. operating expenses equitably and transparently. It gives a historical perspective of the application of the basic elements:

  1. Capacity to pay principle - The economic basis of assessment is the concept of "capacity to pay" which is measured by comparative estimates of income. Alternative measures as national wealth and socio-economic indicators, had also been considered but problems arising from data scarcity and incomparability precluded their use.
  2. Low per capita income allowance (LPAF) - To prevent anomalous assessments resulting from the use of income levels, comparative income per head of population was factored into the methodology by applying LPAF. It is based on the premise that more developed countries contribute a bigger share towards defraying the expenses of the Organization. LPAF derives assessable income which reduces the assessable contribution of low per capita income countries by the distance between per capita income and an income threshold corresponding to the average per capita income of all members.
  3. Maximum and minimum rates of assessment - In an organization having wide divergence in the range of income of members, maximum and minimum rates are imposed respectively, to lessen the financial dependence of the Organization on a single member and to ensure that the collective financial responsibility of an organization should be borne by all members, without seriously obscuring the relation between assessments and capacity to pay.
  4. An allowance to ease the debt burden of heavily indebted Member States.
  5. A cap of 0.01% in the assessment rates of the least developed countries.
  6. A scheme of limits designed to mitigate extreme variations in assessments between two successive scales.

In summary, the history of U.N. assessments could be classified into three stages: a period from its inception to sometime in the early 1970s that was characterized by stability and infrequent changes in the methodology; the period between 1974-1994 that witnessed the introduction of a number of "radical" changes in the form of new elements such as the debt relief allowance, LDC ceiling and scheme of limits and parameter changes e.g., statistical base period, low per capita income threshold and gradient of the LPAF; and, a third period starting with the 1995-1997 scale where a number of changes adopted previously were eliminated - the scheme of limits was phased out; GNP replaced national income as basic measure of capacity to pay; reducing the floor to bring the assessed rates of the smallest countries in line with capacity to pay - in effect restoring the simpler and more transparent thrust that defined the original framework of the methodology.

Keywords:
Collective financial responsibility; principle of capacity to pay; low per capita income allowance (LPAF); assessable income; income threshold; relief; ceiling and floor rates; least developed countries; debt burden; scheme of limits.

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