Annan recommends General Assembly accept US loan offer to refurbish UN

United Nations Secretary-General Kofi Annan has recommended that the General Assembly accept a $1.2 billion loan offer from the United States to implement a plan to overhaul the world body's deteriorating New York Headquarters.

In his latest progress report on the status of plans to overhaul the UN complex – known as the Capital Master Plan (CMP) – the Secretary-General says that after consulting with financial experts, he believes that the UN, in the current market, could not obtain a lower fixed rate than that proposed by the US, which would set the total financed loan of $1.2 billion to be paid out over a maximum of 30 years at an annual interest rate of 5.4 per cent.

The offer was proposed by the US in 2004 and approved by Congress in March. Annual repayments of the principal and interest under the current scenario would amount to $89.8 million and the total principle and interest to be paid over the life of the loan, including the construction phase, would amount to $2.511 billion.

Mr. Annan also recommends that the Assembly authorize him to conclude an agreement with the host country to preserve the Organization's option to borrow the amount to finance the CMP, provided that the agreement does not create for the UN any financial or legal obligation, or restrict the Organization's discretion to seek funds for the same purposes from any other source if it chooses to do so.

The report notes various alternatives to the use of the proposed UNDC-5 building as swing space for UN staff while the CMP is underway. Mr. Annan notes that use of the space is now in question because the New York State legislature did not pass, as had been expected, legislation necessary that would have allowed that part of the project to go forward. While hopeful that the requisite laws will be approved, he notes that the delay has affected the overall timing and cost of the project. Still, he says, UNDC-5 represents a unique opportunity for the UN to accommodate its long-term needs.

The overhaul of the UN complex is widely viewed as the most cost-effective approach to stemming the deterioration of the world body's Headquarters. Emergency repairs to address the prevailing health, safety and security problems in the building, coupled with inefficient energy use, far exceed the savings that could accrue if the problems are addressed systematically, Mr. Annan says.