How was the risk of exchange rate fluctuations dealt with in the past?
3. There was little risk during the period from FAO’s inception up to the early 1990s because, the day that the Conference adopted the programme budget, it also revised the budget rate of exchange to the spot rate current on that day and accepted the consequences that this may have had for the budget level. In other words, if assessed contributions increased because of a fluctuation in the exchange rate, Members were obliged to accept the increase – and the same was true if the assessed contributions decreased. 4. In the early 1990s the era of zero nominal growth (ZNG) budgets began. Under the ZNG strategy, the budget is pre-established as an absolute amount during the negotiation process and no adjustment to compensate for changes in the US dollar exchange rate is made on the day the budget is adopted. In effect, this strategy has transferred the risk of a loss or gain caused by exchange rate variances between biennia from the Membership to the Programme of Work. This represents a pot
