Despite repeated requests to increase the World Trade Organization’s budget during 2022 and 2023, Director-General Ngozi Okonjo-Iweala says that “the organization will have a budgetary surplus of CHF 4.8 million (close to USD 5 million)”, an increase that prompted her to seek “stepping up our recruitment to hire the very best staff.”
In a restricted letter (JOB/BFA/102) sent to the new chair of the WTO’s Committee on Budget, Finance, and Administration on April 29, the DG wrote that the very best staff will be hired “utilizing the strategic staffing competency and mapping framework that are developing.”
The DG has embarked on reforming the Secretariat based on a McKinsey and Company report. The reform process generated considerable controversy in the organization, said several people familiar with the reform-related developments.
Against this backdrop, in her letter, seen by WTD, she told budget committee chair Jose Sanchez-Fung of Dominican Republic, “I am reaching out to you at this time because we have closed the books for 2023, and our External Auditors are in the process of auditing our Financial Statement. That statement and the audit report will be provided to Members for discussion at the July CBFA meeting.”
She said that “before the audited statements are released to us and to Members,” she wanted “to provide some informal insight to you as to our budgetary result for 2023. I do so in the interest of making sure that you and our Members have pertinent information as quickly as possible.”
She said, “As we could begin to see in the 3rd Quarter Report issued to Members last year, the Organization will have a budgetary surplus of CHF 4.8 million for 2023.”
Ms Okonjo-Iweala said that “it may seem counterintuitive that we had a budget surplus in 2023 at the same time that we were asking for an increase in budget for the 2024 and 2025 biennium.”
Behind this development, she said, “last year, we were facing considerable uncertainty as to whether Members would provide us with a budget increase as we faced inflationary pressures as well as certain unavoidable mandatory and essential expenses.”
She said “I am gratified that Members granted us a modest increase, but that decision was not made until mid-December.” The DG maintained that “ we have seen a record number of Members in arrears or quite tardy in making the required contributions.”
Ms Okonjo-Iweala said “we were forced, in the interest of sound financial management, to defer necessary expenditures, to the extent we could, until this year because we did not know if we could afford to take on those longer-term liabilities.”
She said that “the lion's share of the surplus is due to the record number of vacant posts that we felt was prudent to maintain so we could avoid making staffing commitments that could not be supported by our available resources in the coming biennium given that Members had not made the final decision on our budget.”
Further, “related to this point are the delays in the recruitment process that we faced and the turnover in key Director and Human Resources positions, which are now being addressed,” she said.
She told the chair that “the large number of vacant posts has caused us to rely disproportionately on short-term staff, which cost less,” adding that “we are affirmatively addressing this disparity.”
Ms Okonjo-Iweala acknowledged that “the increase in voluntary departures is of concern, as is the increase in external applicants who are declining offers of employment.”
She cited “two underlying problems, based on feedback we have received.”
The first problem, according to the DG, is that “the WTO grade structure is lower than that of comparable international organizations.”
Consequently, “prospective staff members are understandably reluctant to accept a position with the WTO that they perceive as a lateral move or sometimes, a reduction in grade level,” she said.
“At the same time, staff already at the WTO are being offered positions in other organizations that are, at times, two or three grades higher,” she argued, pointing out that “a related problem is that the more attractive packages (salaries and benefits) that were once a sales point of the WTO are no longer on offer. Both of these factors help to explain why staff are leaving and prospective staff are declining offers.”
In conclusion, she said, since “the Members have graciously increased our budget for the 2024-2025 biennium, we have considerably more certainty to plan and spend our resources in 2024 in the manner that we set forth in our final budget request last year.”
“To that end, we are committed to stepping up our recruitment to hire the very best staff within the ceiling set by Members, utilizing the strategic staffing competency and mapping frameworks that we are developing,” she maintained.
She said that she wants to “undertake the essential security, information technology, and infrastructure projects that we detailed to Members last year.”
The DG said she will “provide a recommendation to you and the Members under Financial Regulation 23 as to how to utilize the surplus, for your consideration and decision.”
Last year, members approved a modest hike of 3.6 percent in the World Trade Organization’s budget for 2024, after rejecting a separate proposal for increased contribution to the WTO Pension fund of CHF 4.4 million (around US$4.5 million). The increased contribution to the pension was turned down by India, Indonesia and Russia till the Secretariat carried out substantial reforms, said people familiar with the development.
The meager increase of 3.6 percent in the WTO’s regular budget from CHF 197.2 million in 2023 to approximately CHF 204.29 million. The budget proposal was worked out by the European Union, said people familiar with the development.
The meager hike in the WTO’s budget for next year is a setback of sorts for the Director-General, who had asked for a “modest budget increase of CHF 14.56 million (around $15 million) for 2024”, and an additional CHF 1.94 million for 2025, said people familiar with the development.
The big donors to the WTO's budget like Germany, the Netherlands, and Sweden among others, who had rejected the DG’s budget hike proposal for 2023, seemed to have changed their positions, said people familiar with the discussions.
The United States, given its overall share in international trade both in goods and services, will have to pay CHF 23.70 million in 2024 as compared to its contribution of CHF 22.80 million this year.
China, according to the EU’s proposal, will be required to pay CHF 23.20 million in 2024 as compared to CHF 21.03 million this year. Germany would be required to pay CHF 14.84 million in 2024, as compared to CHF 14.06 million this year. Japan, which is currently contributing CHF 7.4 million, will be required to pay CHF 7.6 million in 2024.
India’s contribution will go up by almost CHF 400,000 in 2024, from CHF 4.57 million to CHF 4.96 million, while Malaysia’s contribution will go up by about CHF 100,000, from CHF 1.83 million this year to CHF 1.927 million in 2024, according to the EU’s proposal.
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