Concerns over Cash Shortfall in Regular Budget Aired as Fifth Committee Discusses United Nations Financial Situation
Gathered today to discuss the Organization’s finances, delegates of the Fifth Committee (Administrative and Budgetary) once again prodded each other to make their full, timely financial payments to help the Secretariat ease a cash crunch in the regular budget and satisfy the mandates outlined in the United Nations Charter.
Just a week after giving Member States a detailed set of numbers on the Organization’s financial picture, Under-Secretary-General for Management Yukio Takasu today delivered an update showing 134 Member States had now paid their assessments in full to the regular budget. Additional payments also had been received for peacekeeping operations and the International Tribunals for Rwanda and the Former Yugoslavia. Thirty Member States had paid their assessments in full. Yet the depletion in the regular budget’s cash position meant the Administration was forced to tap into its Working Capital Fund to keep running smoothly.
Malaysia’s delegate was worried that unpaid assessments to the regular budget totalled $1.05 billion and outstanding payments to the peacekeeping budget stood at $1.46 billion. With an approved budget of $7.83 billion, 100,000 peacekeepers were currently deployed in 17 missions and Member States should be committed to ensure those missions’ activities were not hampered by insufficient financing.
Ecuador’s representative, speaking for the Community of Latin American and Caribbean States (CELAC), also was distressed by the cash shortfalls in the regular budget and the fact that without the crucial contributions, a severe cash problem would emerge at year’s end. It was unfortunate that one State had repeatedly been the main debtor to the United Nations budget.
Voicing its concern about the unpaid assessments, South Africa’s representative, speaking for the “Group of 77” developing countries and China, rejected all unilateral coercive measures that ran counter to international law, even impeding the payments of Group members to different budget areas. He was troubled by links between the withholding of financial obligations to United Nations reform. Withholding funds for approved budgets created artificial political leverage that undermined established principles of governance of the United Nations, based on the sovereign equality of Member States.
Cuba’s delegate said a stable and predictable financial basis was necessary for the United Nations to fulfil its mandates, including the 2030 Agenda for Sustainable Development. Associating his country with the statements made by the Group of 77 and China and CELAC, he said one State was deliberately withholding its payments. For 50 years, Cuba had suffered from the unjust embargo imposed by the United States and welcomed recent efforts by United States President Barack Obama to normalize bilateral relations. He asked for support for a draft resolution calling for the lifting of the embargo, which would be put to a vote on 27 October in the General Assembly.
Recognizing the delegates serious concerns, Mr. Takasu thanked all Member States that had paid their assessments in a timely manner. The negative cash flow of the regular budget was very critical as the Organization had already tapped into monies from the Working Capital Fund. If no payments were received in the next few weeks, operating the giant Organization would be difficult.
Also speaking today were the representatives of Singapore (on behalf of the Association of Southeast Asian Nations), Canada (also speaking on behalf of Australia and New Zealand), Japan, Lao People’s Democratic Republic, Senegal and Israel, as well as the European Union.
The Fifth Committee will reconvene at 10 a.m. Tuesday, 27 October to discuss several agenda items under the proposed 2016-2017 programme budget, including the International Public Sector Accounting Standards (IPSAS); construction and property management; and the Global Service Delivery Model. It will also discuss the Capital Master Plan, under the 2014-2015 programme budget.
Improving United Nations Financial Situation
YUKIO TAKASU, Under-Secretary-General for Management, updated the Committee on the Organization’s financial situation. He referred to the Secretary-General’s report on the subject (document A/70/433), which reviewed the situation as it stood on 2 October. He said that since the 2 October cut-off date, the United Nations had received $6 million from the regular budget from six Member States. A total of $110.3 million had been received for peacekeeping operations from 20 Member States and a total of $1.5 million had been received from two Member States for the International Tribunals for Rwanda and the Former Yugoslavia.
In addition to the payments that Cameroon and Jordan made to the regular budget and noted on 15 October, Antigua and Barbuda, Croatia, Ethiopia and Oman had since fully paid their assessments to the regular budget, bringing the total to 134 Member States. For peacekeeping operations, Mr. Takasu said he had already mentioned on 15 October the payments made from Hungary and Luxembourg. Since then, the Czech Republic, Georgia, Kenya, Namibia and Switzerland also had paid all peacekeeping assessments currently due, bringing the total number to 30 Member States.
Regarding the International Tribunals, India, which Mr. Takasu had mentioned on 15 October, had fully paid as had Belgium since then, bringing the total to 96 Member States. As indicated in paragraph 23 of report A/70/433, payments received from Georgia, Kenya and Switzerland had resulted in their addition to the list of Member States paying their assessments in full for all categories. Since then, the Czech Republic and Namibia had also fully paid in all categories. He thanked those Member States for their positive action.
LYLE DAVIDSON (South Africa), speaking on behalf of the “Group of 77” developing countries and China, said he was concerned that unpaid assessments for the regular budget and the International Tribunals were marginally higher than in October 2014. But the Group was encouraged that the Organization had seen an increase in the level of paid assessments for peacekeeping operations from last year. The Group also was encouraged that the Organization was making progress in addressing outstanding payment to Member States, as it related to troop costs and contingent-owned equipment. Yet the Organization was strongly urged to significantly reduce the outstanding amount by the end of 2015 since many troop-contributing countries were also developing countries, which could not financially sustain their troop commitments and maintain their equipment on their own for extended periods of time. That was a major concern for the Group and it wanted to see improved timelines.
Even as it recognized the genuine economic difficulties of Member States that temporarily impacted their ability to meet their respective financial obligations, the Group urged all Member States to pay their assessed contributions in full, on time, and without conditions. It continued to reject all unilateral coercive measures contrary to international law, which obstructed and sometimes impeded payments from Group members to the different budgets. The Group remained concerned about links between withholding financial obligations and United Nations reform. Withholding funds for approved budgets created artificial political leverage that undermined established principles of governance of the United Nations, which were based on the sovereign equality of Member States. The Group reiterated its concern that the rationale for reducing the 22 per cent ceiling in 2000 was to facilitate the payment of arrears and improve the Organization’s financial situation. The Group was concerned at the continued significant levels of arrears of the Organization’s major contributor and the potential impact on mandate delivery.
AMÉRICA LOURDES PEREIRA SOTOMAYOR (Ecuador), speaking for the Community of Latin American and Caribbean States (CELAC), expressed concern about the cash shortfalls in the regular budget. If due contributions were not received, a severe cash problem would arise in the final months of the year. About $1.053 billion in regular budget assessments had remained unpaid, $16 million higher than a year earlier. It was unfortunate that one State had repeatedly been the main debtor to the United Nations budget. The Community recognized the efforts of developing countries to meet their financial obligations despite their economic problems. Reimbursements for troops, formed police units and contingent-owned equipment largely depended on Member States fulfilling their financial obligations on time. Some members of the Community contributed troops and equipment and kept them active at their expense for an extended period of time. Member States that had not paid their dues to the Capital Master Plan should do so promptly and the Secretariat must complete the remaining tasks of the Plan within the budget and the timeframe approved by the Assembly. The Community rejected any unilateral measure contrary to international law as it made it difficult for some members of the Community to pay their dues to the Organization.
JOSEPH TEO (Singapore), speaking for the Association of Southeast Asian Nations (ASEAN), said that, as of 15 October, 130 Member States, including the 10 ASEAN members, had paid their regular budget dues. He commended the 24 States that had paid all their assessments as of that date, urging the rest to complete their financial obligations promptly because the failure to do so compromised the effectiveness of the United Nations in implementing its mandates. Voicing concern that unpaid assessments were higher this year than in 2014 despite full payments by more Member States, he noted the current negative cash position and an anticipated cash problem in the coming months. He also noted that the Organization still owed outstanding payments to Member States contributing troops, police and equipment.
FRANCESCO PRESUTTI, a representative of the European Union Delegation, said that the sound management of the Organization’s resources was a priority of the Union and a joint responsibility of Member States and the Secretariat. They both must take their responsibilities seriously. The number of Member States that had paid their regular budget assessments in full had slightly increased from a year earlier, but the significant level of unpaid assessments was a concern. The number of those that had paid full dues for peacekeeping operations and the International Tribunals had decreased. While stressing the financial responsibility of all States, it was imperative to take concrete steps at all levels to spend more wisely, deliver in new ways and ensure adherence to the agreed budget levels. That applied to all activities, from peacekeeping to construction. There was still substantial room for new approaches that could lead to further savings and efficiencies, not least to allow a meaningful reprioritization of activity.
KENT VACHON (Canada), also speaking on behalf of Australia and New Zealand, expressed concern at Under-Secretary-General Yukio Takasu’s warning that the Organization’s cash position would present “severe” problems unless the three countries accounting for most of the arrears made payments by year-end 2015. He echoed Mr. Takasu’s call on the 65 Member States that had not yet done so to take action on their unpaid assessed contributions. He underscored the negative consequences of those outstanding payments, which currently exceeded $2.5 billion, noting that troop-, police- and equipment-contributing countries were waiting to be reimbursed for costs they had incurred. He commended the Secretariat for lowering the level of outstanding payments to troop and police contributors despite the difficulties in doing so due.
He expressed regret over the gap between Member States that had paid on time and those that had not, and reiterated the commitment of his country, Australia and New Zealand to pay their dues on time and without condition. He strongly encouraged Member States in arrears to make use of the multi-year payment mechanism. Given the fiscal constraints faced by many Member States, the United Nations must continuously improve and adapt its practices. A collective effort was needed to identify areas for efficiency gains and innovative solutions should be found to streamline processes and prioritize activities. A 2014 cross-regional group initiative that commissioned an independent expert panel report on United Nations planning and budget processes was commendable. Canada, Australia and New Zealand were pleased that 12 of their 26 recommendations set forth in the report were being implemented or considered. That was a welcome step to much-needed reform.
HAJIME KISHIMORI (Japan) said even with a budget cycle that was different from the United Nations, Japan was very proud that it had paid in full all its assessments that were due and payable for the regular budget, peacekeeping Operations, the International Tribunals and the Capital Master Plan. Japan made these payments in a timely manner because it recognized that it was the responsibility of Member States, under the United Nations Charter, to pay their assessments. “Japan had once again discharged its commitment to contribute to international peace and prosperity, in spite of our long-standing domestic financial difficulties and recent trends in currency exchange rates,” he said. He reiterated Japan’s request that the Secretariat continue to use the resources contributed by Member States as efficiently and effectively as possible when implementing mandates. The Secretariat could and should draw on the continuing efforts and experiences of Member States in their own countries. The Assembly should aim for reasonable and practical solutions when discussing various budget proposals.
RAMLAN IBRAHIM (Malaysia) said that while the overall financial situation of the United Nations was sound, his delegation was concerned that unpaid assessments to the regular budget had totaled $1.05 billion and outstanding payments to the peacekeeping budget stood at $1.46 billion. With an approved budget of $7.83 billion, 100,000 peacekeepers were currently deployed in 17 missions. Malaysia was mindful of the difference between fiscal cycles of many Member States and those of peacekeeping missions, but financing peacekeeping operations should signify the global community’s serious commitment to international peace and security. Member States should be committed to ensure those missions were not hampered due by a lack of proper financing.
KEOPASEUTH CHANTHAPHIM (Lao People’s Democratic Republic), aligning with the Group of 77 and China, said it was important for Member States to meet their annual financial obligations in full, on time and without conditions. He expressed satisfaction that the Organization’s 2015 financial indicators were generally sound and commended many countries for paying in full to the regular budget and the budgets for peacekeeping operations, the International Tribunals and the Capital Master Plan. Despite financial constraints, Lao People’s Democratic Republic was committed to fully paying all its contributions in a timely manner.
CHEIKH TIDIANE DEME (Senegal), endorsing the statement made by South Africa on behalf of the Group of 77 and China, noted the improvement in the Organization’s financial situation and said he was pleased by the number of Member States that had paid their contributions. Yet more than $1 billion remained unpaid in the regular budget and “cash tensions” were likely by the end of the year if payments were not made. There had been a trend in voluntary contributions for specific activities. That was a detriment to some programmes and the Organization needed financial stability. The making of full, unconditional payments by the appropriate deadlines was the cornerstone of the Organization’s stability. Despite its economic constraints, Senegal had honoured all of its financial obligations to the budget. Most national budgets were subjected to financial constraints and stagnation in the global economy. Yet the Organization’s budget had increased by about $180 million. The United Nations had to spend less and achieve better results, improve its collection of budgetary income and be managed according to the highest standards. With imagination, it was possible to achieve more with less. Regarding peacekeeping operations, Senegal urged the United Nations to be more diligent in reimbursements to troop-contributing countries. It was crucial to provide the means to produce a modern Organization to meet its requirements and fulfil its mandates. Any change to the scale of assessments had to be a consensus by all Member States.
YOTAM GOREN (Israel) said his Government had paid in full all its assessments for the regular budget, peacekeeping operations, the International Tribunals and the Capital Master Plan. Israel had been for the last few years among a small number of States that had consistently paid all their dues. For his country, it was a matter of policy. Fiscal responsibility of Member States was only half of the equation. There were various structural and substantial challenges in the Organization. Resources provided by Member States must be effectively managed and fittingly prioritized to ensure that the demands of global peace, security and development could be met. Member States must make sure that mandates were in line with the Charter and without prejudice, bias or partiality. He would stand up for consensus, common ground and collegiality and speak out on various issues of importance, including the proposed 2016-2017 budget, the second performance report for the 2014-2015 budget, and the information and communications technology strategy.
JAVIER ENRIQUE SANCHEZ AZCUY (Cuba), associating with the Group of 77 and China and with CELAC, said that a stable and predictable financial basis was necessary for the United Nations to fulfil its mandates, including the 2030 Agenda for Sustainable Development. It was vital for Member States to pay their assessed dues on time and in full. One State was deliberately holding its payments, an action negatively impacting the Organization’s ability to carry out its mandates. Regrettably, “arbitrary” cuts had been proposed in the budget for 2016-2017. They would undermine implementation of programmes mandated by Member States. The financial crisis had an ongoing impact on the affected nations’ capacity to pay their dues. Unilateral coercive measures made that worse. For 50 years, Cuba had suffered from the unjust embargo imposed by the United States. Welcoming the efforts made by United States President Barack Obama towards the normalization of bilateral relations, he solicited support for a draft resolution calling for the lifting of the embargo. The text would be put to a vote on 27 October in the General Assembly.
Mr. TAKASU, taking the floor a second time, thanked all the delegations that had paid their assessments in a timely manner. He acknowledged the serious concerns of Member States. The negative cash flow of the regular budget was very critical and the Organization had already resorted to using funds from the Working Capital Fund. If no payments were received in the next few weeks, it would be difficult to operate. Regarding the comments on reimbursements to troop-contributing countries, he acknowledged that $1 billion had been owed to Member States for personnel and equipment and as noted earlier this month, that amount had been reduced. It was the Administration’s intention to make additional payments before the end of the year. Implementing the Organization’s activities within a tight budget required an important balance. Member States had to agree on the Organization’s activities and provide the resources. It was the Secretariat’s duty to find more efficient ways to carry out the mandated activities. It was a balance, with Member States meeting their fiscal responsibilities and obligations, and the Secretariat maintaining fiscal discipline.