US Offers Interest-Bearing Loan To Refurbish UN
US Offers Interest-Bearing Loan To Refurbish UN, Pending Congressional Approval
New York, Mar 17 2004 5:00PM
The United States has offered to loan the United Nations $1.2 billion to implement a plan to overhaul the UN's deteriorating New York Headquarters.
Addressing the main UN budget committee on Tuesday, the US delegate, Patrick F. Kennedy, said the proposal is contained in President Bush's budget plan and must be approved by Congress to go forward.
Ambassador Kennedy also stressed that Washington would be paying its assessed share of the loan's principal and interest. Under the UN's scale of contributions, the US contributes 22 per cent.
"The interest to be paid by Member States will not, in actuality, be paid to the US Government, but instead, to the investors who put up the principal," he said, adding that Washington "makes no money on the loan to the UN and, in fact, is paying approximately $6m to guarantee the loan and insure against default."
Under the proposal, the loan, with a 5.4 per cent interest rate, could be advanced with up to a 30-year term. The $1.2 billion is an upper limit, and Ambassador Kennedy suggested that if supplementary financing is needed, "it may be appropriate for the Secretary-General to explore other funding opportunities, including contributions from public and private sources."
Speaking on behalf of the European Union (EU), Margaret Stanley of Ireland voiced concern that the US proposal would double the project's cost, which would then have to be borne by Member States. India's delegate, Jaideep Mazumdar, noted that with an interest rate of 5.54 per cent, the UN would end up paying $2.5 billion on a $1.2 billion loan, assuming a 30-year repayment period.
According to an analysis prepared by the UN, the US has proposed advancing $400 million in each of the first three years of construction, with interest amounting to some $265.9 million by the end of five years. Once construction has been completed, the loan would be repayable over a 25-year period, with a 5.54 per cent interest rate, or nearly $90 million per year annually. The total cost is projected at $2,511,137,500.
The analysis, contained in a report by the Secretary-General, recommends that the General Assembly adopt a resolution noting the US offer "with appreciation" while requesting him to consult further with the country's authorities on the loan's terms and conditions. At the same time, he would be asked "to explore other funding opportunities, including contributions from public and private sources."
The overhaul of the UN complex, called the "capital master plan," 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.