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Decision II/8: Financial mechanism

The Second Meeting of the Parties decided in Dec. II/8 To establish for the three-year period from 1 January 1991 to 31 December 1993 or until such time as the Financial Mechanism is established, an Interim Financial Mechanism according to the following:

  1. The Interim Financial Mechanism is established for the purposes of providing financial and technical cooperation, including the transfer of technologies, to Parties operating under paragraph 1 of Article 5 of the Montreal Protocol to enable their compliance with the control measures set out in Articles 2A to 2E of the Protocol. The Mechanism, contributions to which shall be additional to other financial transfers to Parties operating under that paragraph, shall meet all agreed incremental costs of such Parties, in order to enable their compliance with the control measures of the Protocol. An indicative list of the categories of incremental costs is attached as Appendix I to this decision.*
  2. The Mechanism established under paragraph 1 shall include a Multilateral Fund. It may also include other means of multilateral, regional and bilateral cooperation.
  3. The Multilateral Fund shall:
    1. Meet, on a grant or concessional basis as appropriate, and according to criteria to be decided upon by the Parties, the agreed incremental costs;
    2. Finance clearinghouse functions to:
      1. Assist Parties operating under paragraph 1 of Article 5, through countryspecific studies and other technical cooperation, to identify their needs for cooperation;
      2. Facilitate technical cooperation to meet these identified needs;
      3. Distribute, as provided for in Article 9 of the Protocol, information and relevant materials, and hold workshops, training sessions and other related activities for the benefit of Parties that are developing countries; and
      4. Facilitate and monitor other multilateral, regional and bilateral cooperation available to Parties that are developing countries; and
    3. Finance the secretarial services of the Multilateral Fund and related support costs.
  4. The Multilateral Fund shall operate under the authority of the Parties who shall decide on its overall policies.
  5. The President of the Second Meeting of the Parties shall ensure that the Executive Committee establishes, with effect from 1 January 1991, an "Interim Multilateral Fund for the Implementation of the Montreal Protocol" and draws up the financial regulations and rules of the Fund.
  6. The Parties hereby establish an Executive Committee to develop and monitor the implementation of specific operational policies, guidelines and administrative arrangements, including the disbursement of resources for the purpose of achieving the objectives of the Multilateral Fund. It is established for a threeyear period. Before the end of that threeyear period, the terms of reference of the Executive Committee shall be reviewed by the meeting of the Parties. The Executive Committee shall discharge its tasks and responsibilities specified in its terms of reference as agreed by the Parties, with the cooperation and assistance of the International Bank for Reconstruction and Development (World Bank), the United Nations Environment Programme, the United Nations Development Programme, or other appropriate agencies depending on their respective areas of expertise. The members of the Executive Committee, which shall be selected on the basis of a balanced representation of the Parties operating under paragraph 1 of Article 5 and of the Parties not so operating shall be endorsed by the Parties. The terms of reference of the Executive Committee are attached as Appendix II to this decision.*
  7. The Multilateral Fund shall be financed by contributions from Parties not operating under paragraph 1 of Article 5 in convertible currency or, in certain circumstances, in kind and/or in national currency, on the basis of the United Nations scale of assessments as set out in Appendix III to this decision.* Contributions by other Parties shall be encouraged. Bilateral and, in particular cases agreed by a decision of the Parties, regional cooperation may, up to twenty per cent and consistent with any criteria specified by decision of the Parties, be considered as a contribution to the Multilateral Fund, provided that such cooperation as a minimum:
    1. Strictly relates to compliance with the provisions of the Protocol;
    2. Provides additional resources; and
    3. Meets agreed incremental costs.
  8. The terms of reference of the Multilateral Fund are attached as Appendix IV to the present decision.*
  9. The Parties shall decide upon the programme budget of the Multilateral Fund for each fiscal period and upon the percentage of contributions of the individual Parties thereto.
  10. Resources under the Multilateral Fund shall be disbursed with the concurrence of the beneficiary Party.
  11. Decisions by the Parties under this decision shall be taken by consensus whenever possible. If all efforts at consensus have been exhausted and no agreement reached, decisions shall be adopted by a twothirds majority vote of the Parties present and voting, representing at least a majority of the Parties operating under paragraph 1 of Article 5 present and voting and at least a majority of the Parties not so operating present and voting.
  12. The Financial Mechanism set out in this decision is without prejudice to any future arrangements that may be developed with respect to other environmental issues.
  13. References to dollars ($) in the appendices to this decision are to United States dollars.

* The appendices to this decision are contained in annex IV of the present report.