1 Indirect Cost Recovery Request for Supplementary Appropriation Program-Budget 2013 Secretariat for Administration and Finance

2 AG/Res (XLII-O/12) – General Standards were modified for purposes of determining annual budget ceiling of ICR Fund General Standards Article 80.i.i “…[ICR budget] proposal shall be based on projected revenue equivalent to 90% of the average ICR obtained in the three years immediately preceding the year in which the Program-Budget is adopted and shall be applied to the subsequent three years … The average shall be reviewed every three years…” Therefore, budget ceiling for years were calculated based on the ICR revenue obtained in Background

3 Calculation of ICR Budget Ceiling for Fiscal Years (in thousands of USD) ICR Income6,7188,7237,061 3-year average7,500 90% of 3-year average6,750 Transfer to Regular Fund(1,500) Expenditure budget ceiling5,250 AG/Res. 1 (XLIII-E/12) – Established overall budget ceiling for ICR fund expenditures at a level not to exceed USD 5,250,000.

4 Consideration 1 Member States have made significant multiyear commitments for years 2013 – 2015 In 2013 we estimate these projects may bring as much as USD 434K in additional ICR revenue ProjectDonorExecuting area2013 Contribution (in millions) 2013 ICR revenue (in thousands) 1Development Program for a Satellite System and Applications of Terrestrial Observation Argentina - CONAE Department of Sustainable Development $1.3$141 2Sustainable management of water resources - La Plata Basin UNEPDepartment of Sustainable Development $3.2$160 3Development of water sector INTERAGUAS – Basic Sanitation BrazilDepartment of Sustainable Development $2.7$133 Total$7.2$434 90% of additional ICR revenue 2013$390.5

5 Consideration 1 The General Secretariat will be required to provide additional administrative support services for these projects and incur extraordinary expenditures not previously contemplated in the Approved 2013 Program-Budget Estimated expenditures to provide additional administrative support services for these projects in 2013 amount to approximately USD 67 thousand Additional Administrative Support Service

6 Consideration 2 Actual cost financed by ICR Fund during 2013 are projected to exceed the approved 2013 Program Budget, primarily due to required reclassifications, additional post, special duties assignments, required consultants, benefits and tax reimbursement. Projected increase in 2013 actual personnel costs are approximately USD 559 thousand, plus the USD 67 thousand previously identified for additional administrative support services (a total of USD 626 thousand). Actual Personnel Cost Higher than Budgeted

7 Proposal The General Secretariat needs budgetary authorization to finance these expenses and requests a supplementary appropriation for the 2013 ICR budget of USD 390,500, equivalent to 90% of the projected additional ICR revenue to be received in The General Secretariat will have to manage expenditures to not exceed budget ceiling and eliminate the amount of USD 235.5K, which is the difference between the increased amount of projected expenditures (USD 626K, which includes the additional administrative support services of USD 67K) and the supplementary appropriation amount requested (USD 390.5K). Any unused appropriations shall be returned to the Reserve Subfund of the ICR fund. The General Secretariat will continue to report periodically to the Permanent Council through the CAAP, the status of the ICR fund through the quarterly management reports.

8 ICR projection ICR Projection for 2013 ICR Collection based on average ICR collected in 2012 and 2011 plus additional projected income Projected expenditures based on approved budget USD 5,250 + USD ProjectionIn thousands USD ICR Collection 7,136 Less: Projected expenditures (Budget Limit) (5,640.5) Transfer to RF (1,500) Net Change (4.5) Plus: Beginning Balance Jan Ending Balance Dec-2013 (projected) If General Secretariat executes budget at the new approved level, the ending balance of the ICR for 2013 is projected to be approximately USD 217.5K, similar to year 2012.