The Multilateral Fund for the Implementation of the Montreal Protocol provides funds to help developing countries comply with their obligations under the Protocol to phase out the use of ozone-depleting substances (ODS) at an agreed schedule. ODS are used in refrigeration, foam extrusion, industrial cleaning, fire extinguishing and fumigation. Countries eligible for this assistance are those with an annual per capita consumption of ODS of less than 0.3 kg a year, as defined in Article 5 of the Protocol. They are referred to as Article 5 countries.

The Montreal Protocol was agreed in 1987 after scientists showed that certain human-made substances were contributing to the depletion of the Earth's ozone layer that protects life below from damaging ultraviolet radiation. The Multilateral Fund was established by the London Amendment to the Protocol in 1990.

The phase-out of ODS will enable the ozone layer to repair itself.

The Fund was the first financial mechanism to be born from an international treaty. It embodies the principle agreed at the United Nations Conference on Environment and Development in 1992 that countries have a common but differentiated responsibility to protect and manage the global commons.

In 1986, industrialized countries consumed 86 per cent of the most important ODS, the chlorofluorocarbons (CFCs). They agreed to contribute to the Fund in order to help Article 5 countries achieve the Protocol's goals. Article 5 countries committed themselves to joining the global effort to restore the depleted ozone layer. This global consensus forms the basis of the operation of the Multilateral Fund that confines the liability of the Fund to costs essential to the elimination of the use and production of ODS. An important aspect of the Fund is that it funds only the additional (the so-called 'incremental') costs incurred in converting to non-ODS technologies.

The Fund is managed by an Executive Committee with an equal representation of seven industrialized and seven Article 5 countries that are elected annually by the Meeting of the Parties. The Committee reports every year to the Meeting of the Parties on its operations.

Financial and technical assistance is provided in the form of grants or concessional loans and is delivered primarily through four implementing agencies:

• United Nation Environment Programme (UNEP)
• United Nations Development Programme (UNDP)
• United Nations Industrial Development Organization (UNIDO)
• World Bank

Up to 20 per cent of the contributions of contributing Parties can also be delivered through their bilateral agencies in the form of eligible projects and activities.

The Fund is replenished on a three-year basis by the donors. It provides finance for activities including the closure of ODS production plants and industrial conversion, technical assistance, information dissemination, training and capacity building aimed at phasing out the ODS used in a broad range of sectors.

The Fund Secretariat is based in Montreal, Canada, and comprises a small number of professional and support staff.

The institutional structure of the Multilateral Fund was established at the 1990 Meeting of the Parties to the Montreal Protocol in London. Established as an interim mechanism in 1991, and on a permanent basis in 1994, its structure has not been changed in any important respect since.

• The Multilateral Fund operates under the authority of the Parties to the Montreal Protocol.
• The Executive Committee comprising seven developed and seven developing countries oversees Multilateral Fund operations.
• The Fund Secretariat assists the Executive Committee and carries out day-to-day operations.
• In delivering financial and technical assistance, the Fund works together with implementing agencies: UNDP, UNEP, UNIDO, the World Bank and a number of bilateral agencies.
• The Fund Treasurer is responsible for receiving and administering pledged contributions (cash, promissory notes or bilateral assistance), and disbursing funds to the Fund Secretariat and the implementing agencies, based on the decisions of the Executive Committee.