The Multilateral Fund was established by a decision of the Second Meeting of the Parties to the Montreal Protocol (London, June 1990) and began its operation in 1991. The main objective of the Multilateral Fund is to assist developing country parties to the Montreal Protocol whose annual per capita consumption and production of ozone depleting substances (ODS) is less than 0.3 kg to comply with the control measures of the Protocol. Currently, 129 of the 184 Parties to the Montreal Protocol meet these criteria. They are referred to as Article 5 countries.

Contributions to the Multilateral Fund from the industrialized countries, or non-Article 5 countries, are assessed according to the United Nations scale of assessment.

The Fund has been replenished five times: US $240 million (1991-1993), US $455 million (1994-1996),  US $466 million (1997-1999), and $440 million (2000-2002) and $474 million (2003-2005).

At 18 December 2003, contributions to the Multilateral Fund from industrialized countries (including Countries with Economies in Transition or CEIT countries) totalled US $1.7 billion.

The Fund is managed by an Executive Committee assisted by the Fund Secretariat. Projects and activities supported by the Fund are implemented by four international implementing agencies.

The Executive Committee

Responsibility for overseeing the operation of the Fund rests with an Executive Committee comprising seven members each from Article 5 and non-Article 5 countries. The term of office of the Executive Committee is one calendar year. The Chair and Vice-Chair of the Executive Committee alternate each year between the two groups.

The functions of the Committee include the development of operational policies, criteria for project eligibility, and other guidelines and administrative arrangements, monitoring of the implementation of these policies, approval of implementing agencies' business plans and work programmes, approval of expenditures for investment projects and other activities, allocation and disbursement of resources, and the monitoring and evaluation of performance.

The Executive Committee holds three meetings per year, each of five days duration.

Current membership of the Executive Committee is: Argentina, Austria, Bangladesh, Belgium, Canada, China, Hungary, Islamic Republic of Iran, Japan, Mauritius, Niger, United Kingdom and the USA.

The Fund Secretariat

The Fund Secretariat was established in 1991 in Montreal, Canada. It assists the Executive Committee in the discharge of its functions. Its activities include: development of the three-year plan and budget and a system for fund disbursement; management of the business planning cycle of the Multilateral Fund; monitoring the expenditures and activities of the implementing agencies; preparation of policy papers and other documents; review and assessment of investment projects, country programmes and the business plans and work programmes of the implementing agencies; liaison between the Committee, governments and implementing agencies; and servicing meetings of the Executive Committee. The Secretariat also includes the monitoring and evaluation Function which was established by the Executive Committee in May 1997.

The Fund Secretariat is headed by the Chief Officer who reports directly to the Executive Committee and is comprised of eleven professional and eleven general service staff members.

The Implementing Agencies

Four international agencies have contractual agreements with the Executive Committee to assist Article 5 countries by preparing country programmes, feasibility studies and project proposals, providing technical assistance for project development and implementation, as well as information dissemination. These agencies are: the United Nations Development Programme (UNDP), the United Nations Environment Programme (UNEP), the United Nations Industrial Development Organization (UNIDO) and the World Bank. Additionally, several developed countries also provide similar assistance on a bilateral basis.

With the assistance of these four implementing agencies as well as the bilateral agencies, recipient enterprises prepare project proposals and ODS phase-out related activities which are reviewed by the Fund Secretariat and considered by the Executive Committee.

Activities of the Multilateral Fund

As of July 2003, the Executive Committee has held 39 meetings since the establishment of the Multilateral Fund in 1990. During these meetings, the Executive Committee approved the expenditure of US $1.48 billion, to support about 4,300 projects and activities in 134 developing countries to be implemented through the four implementing agencies and by bilateral agencies.

The implementation of these projects will result in the phase-out of the consumption of more than 173,000 ODP tonnes and the production of about 62,200 ODP tonnes of ozone depleting substances.  Of this total, about 127,890 ODP tonnes consumption and 52,260 production have already been phased out from projects approved through 2002.