Discussing Organization’s Financial Situation, Speakers in Fifth Committee Worry Restricted Spending Due to Liquidity Crisis Is Impacting Mandate Delivery
Speakers for United States, China Announce Plans to Pay Arrears
Troubled by the Organization’s precarious liquidity situation and its impact on mandate delivery, delegates of the Fifth Committee (Administrative and Budgetary) today urged Member States with adequate financial resources to meet their obligations fully, promptly and without conditions.
Cuba’s representative, speaking on behalf of the Group of 77 and China, said he was very concerned that as of the end of September only 64 per cent of the regular budget assessments had been collected, the lowest percentage in the last five years. The unpredictable pattern of collections has again led to extraordinary measures, such as a temporary hiring freeze and restricted spending, which negatively affect mandate delivery. “The Group reiterates that budget management must be driven by programme delivery and not based on available cash on hand,” he said. Likewise, Ghana’s delegate, speaking on behalf of the African Group, reiterated the Group’s long-standing position that the “operational capability and financial health of the United Nations determines its ability to execute its roles and responsibilities”.
The speaker for Guyana, also concerned with the hiring restrictions’ implications for programme and mandate delivery, appealed to Member States to predictably pay their assessed contributions to the regular budget in full. This, she said, will not only improve the liquidity situation but prevent a worsening of liquidity pressure in 2024. Her country is also concerned about the high percentage of unpaid contributions for the peacekeeping operations budget.
China’s delegate said it will soon pay the balance of its 2023 contributions and peacekeeping assessments, adding that her country’s share of contributions has continued to see significant increases in recent years, “resulting in great financial pressure”. She pointed out that the persistent refusal of an individual major contributor to pay its due contributions in full is the root cause of the Organization’s liquidity problem. No other measure to alleviate the liquidity issue can fundamentally resolve the problem.
On that, the United States’ representative said that as the largest contributor to the Organization, his Government takes its obligations seriously and is making a regular budget payment of about $200 million in October and an additional payment in November. Regarding United States arrears to the regular budget, they stand at $222 million as of 1 January 2023, yet as a percentage of the regular budget, they are at their lowest level since 1984. “This bears repeating, US arrears are lower than they have been in each of the last 38 years,” he said.
The speaker for the United Kingdom said that with recent heightened geo-political uncertainties, the Secretariat very importantly needs sufficient resources and up-to-date financial rules and regulations to allow for much-needed mandate implementation. His Government is committed to stabilizing the Organization’s finances, having streamlined its internal approvals process and transitioned its payment pattern to align with the UN’s financial calendar. It encourages Member States to do likewise. “It is crucial that every dollar the United Nations spends has the greatest impact on the ground,” he emphasized.
In response to a question by the Swiss delegate, Chandramouli Ramanathan, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, detailed the Secretariat’s recent cost-cutting measures. He said incoming payments will tide the Organization over for November while the financial situation for December depends on payments. “We would like to see the announcements translate into money in the bank before we decide to relax any restrictions,” he said, adding the Secretariat does not intend to increase any restrictive measures.
Catherine Pollard, Under-Secretary-General for Management Strategy, Policy and Compliance, updated the Committee on developments since her 9 October briefing as she presented the Secretary-General’s report on the Organization’s financial situation.
Improving Financial Situation of United Nations
CATHERINE POLLARD, Under-Secretary-General for Management Strategy, Policy and Compliance, updated the Committee on developments since last week’s briefing as she presented the Secretary-General’s report, “Financial situation of the United Nations” (document A/78/524). For peacekeeping operations, Barbados, Belgium, Ethiopia, India, Lithuania, Sweden, Switzerland, the United Kingdom and Zambia have paid in full all due peacekeeping assessments, which brings the total number of Member States having paid this category in full to 53. For the international tribunals, the United Kingdom has paid in full, bringing the total number of those fully paid up for this category to 114. As a result of recent payments from Barbados, Ethiopia, Sweden and Switzerland, these Member States are now fully paid for all categories. This information is reflected in paragraph 23 of the report. The Secretary-General wishes to pay special tribute to the 40 Member States that have paid all assessments due and payable, at the time of reporting, she said.
Subsequent to the report’s issuance, payments were received from Belgium, India, Lithuania, Monaco, the United Kingdom and Zambia, she said. These Member States are now fully paid for all categories and brings the total fully paid to 46 Member States. In addition, payments have been received from Mali for the regular budget, and for peacekeeping operations: Bhutan, Dominican Republic, Egypt, Estonia, Malta, Nepal, Oman and Saint Lucia.
RICHARD TUR DE LA CONCEPCIÓN (Cuba), speaking on behalf of the Group of 77 and China, expressed serious concern that, as of 30 September 2023, only 64 per cent of the regular budget assessments had been collected, the lowest percentage in the last five years. The unpredictable pattern of collections has resulted again in extraordinary measures, such as the hiring suspension and restricted spending, which negatively affect mandate delivery. At the same time, the gap between budgeted and actual vacancy rates, the increase in post adjustments, and faster hiring have increased the liquidity pressure. “The Group reiterates that budget management must be driven by programme delivery and not based on available cash on hand,” he said. The Group is therefore extremely concerned that more than two-thirds of the current regular budget arrears can be attributed to a single Member State, despite its capacity to pay. That Member State also benefits from an artificially imposed ceiling on its contributions, that was premised on the unfulfilled clearance of prior arrears, he said, and urged it to fulfil its financial and legal obligations to the Organization without delay.
Regarding peacekeeping, he said the Group is encouraged to see more timely payments of liabilities to troop and police-contributing countries. Yet as of 30 September 2023, the Organization is experiencing its highest percentage of unpaid assessments over the last five fiscal periods. This will potentially impact the reimbursements. He called on Member States who are able “to put their words and commitments into action” and settle their arrears and pay their assessments in full, on time and without conditions. Despite bearing an ever-increasing share of the Organization’s financial burden, the Group will constructively participate in efforts towards resolving the Organization’s financial difficulties.
Speaking in his national capacity, he said that Cuba has fully complied with its financial obligations despite the persistent economic blockade imposed by the United States, which has reached unprecedented levels. Cuba has lost its relationships with banks that traditionally provided services abroad, which has made it difficult for the country to make its payments to UN funds, programmes and agencies and other international organizations. The situation has worsened as Cuba has been placed on a list of countries that supposedly co-sponsor terrorism. “I would perhaps be considered a terrorist in view of that list,” he said. “How absurd.” Despite all these difficulties, Cuba will continue to meet its financial obligations, he said.
MARK SEAH (Singapore), speaking on behalf of the Association of Southeast Asian Nations (ASEAN), said the Group is worried about the Organization’s liquidity situation, caused mainly by the late or non-payments of assessed contributions. It was troubling to hear that collections trailed estimates throughout the year. “We were dismayed to learn that the Secretariat had to borrow the full amount of $250 million from the Working Capital Fund in August to meet its payroll obligations and will again borrow the full amount from the Special Account in October,” he said. Despite beginning 2023 with a stable cash position, the Organization may now exhaust its entire liquidity reserve this year and may end it with a cash deficit. “Continuing to operate on a cash conservation basis is unsustainable,” he said, adding that mandate delivery has already been affected and the Organization’s effectiveness is being undermined as it seeks to “turbocharge” the implementation of the Sustainable Development Goals.
ASEAN notes the same worrying trends for peacekeeping operations, where the percentage of unpaid assessments has risen to its highest level in four years: 92 per cent at September’s end. The total outstanding amount for peacekeeping operations is now $3.3 billion, exacerbating liquidity problems faced by these operations. Given the severe liquidity issues facing the regular and peacekeeping budgets, it is imperative that Member States fulfil their financial obligations in full, on time and without conditions, he said. The Group recognizes that some Member States face genuine difficulties in paying their assessed contributions due to factors beyond their control. He commended Member States who, despite these difficulties, meet their obligations. Sustained regular updates by the Secretariat are important so that Member States are apprised of the Organization’s financial situation and the proposed way forward.
RITA OSEI (Ghana), speaking on behalf of the African Group and aligning herself with the Group of 77 and China, reiterated the Group’s long-standing position that the “operational capability and financial health of the United Nations determines its ability to execute its roles and responsibilities”, adding that Members States meeting their financial obligations fully, promptly and without conditions is a necessary element for the effective functioning of the Organization. The Group appreciates all Member States that have paid their assessed contributions and encourages those yet to, to do so. She expressed pleasure that the reimbursements for troops and police of all peacekeeping missions is current, and commended efforts to reimburse Member States for contingent-owned equipment for all missions except the African Union-United Nations Hybrid Operation in Darfur (UNAMID) and United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA). She called on Member States to finalize outstanding contributions to both missions to ensure payment of all outstanding claims.
On the financing challenges of the United Nations, the Group observes that despite measures taken by the General Assembly to enable the Organization to mitigate its liquidity challenges, unpredictable and late payment patterns continue to impede its full functioning, particularly considering that unpaid contributions as of 30 September 2023 is higher than the same period last year. It therefore hopes that the undertakings made by Member States in the past days to pay their contributions will help ease this challenge. Turning to the challenges in cash balance that may be faced in 2024, she expressed the Group’s concern about the impact of the resulting hiring freeze on the effective functioning of the Organization. In this regard, the Group therefore underscores the need to ensure full enforcement of financial rules and regulations as well as decisions of the General Assembly in the management of available finance.
ABO AI (Japan) said ensuring the proper functioning of the Organization by timely and fully paying assessed contributions is the shared responsibility of all Member States. She further stated that her country, the Organization’s third-largest contributor, very speedily responded to the Secretary-General's call on the liquidity situation in peacekeeping operations. “We accelerated our peacekeeping payment by disbursing $380 million in August when the cash balance was extremely unstable. This amount includes an advanced payment of $144 million for the non-mandated period aimed at bolstering liquidity relief,” she said. Japan is unwaveringly determined to actively contribute to the implementation of the United Nations' mandates and emphasizes the “shared responsibility of both Member States and the Secretariat to continuously strive for the effective and efficient utilization of our finite resources”. It will also persist in its calls for budgetary discipline so the Organization can accountably deliver on its mandates.
PAUL COTTAM (United Kingdom) said his country is concerned about the Organization’s deteriorating liquidity situation, particularly considering the decision to supplement the Working Capital Fund with an additional $100 million 18 months ago. He however commended the UN Controller and the entire Organization for carefully prioritizing its activities and managing available resources to maintain mandate delivery. Stating that the UN’s financial health depends on Member States fully, promptly and unconditionally paying their assessed contributions, he urged States with outstanding payments to “fulfil these expeditiously”, adding that, given recent heightened geo-political uncertainties, the Secretariat very importantly needs to be provided with sufficient resources and up-to-date financial rules and regulations to allow for much-needed mandate implementation. The United Kingdom is committed to stabilizing the Organization’s finances, having streamlined its internal approvals process and transitioned its payment pattern to align with the UN’s financial calendar. It encourages Member States to do likewise. “It is crucial that every dollar the United Nations spends has the greatest impact on the ground,” he emphasized.
MARISSA AUDRA FAITH EDWARDS (Guyana) aligning herself with the Group of 77 and China, said her delegation is concerned about the “deterioration in the liquidity situation for regular budget operations over the last year and the possibility of the reversal of the positive trend we have seen over the previous two years”. Guyana is concerned about the reimplementation of hiring restrictions in July, especially on the implications for programme and mandate delivery. She appealed to Member States to pay their assessed contributions to the regular budget in full and in a predictable manner to not only improve the liquidity situation, but also prevent a worsening of liquidity pressure in 2024, adding that those unable to do so on account of specific difficulties should work with the Organization for implementation of a favourable payment plan. “This is crucial for the prudent, fiscal management of the Organization,” she said. For the peacekeeping operations budget, her country is concerned about the high percentage of unpaid contributions and appeals to Member States to pay fully and promptly, while being committed to engage on proposals by the Secretary-General to improve resource management.
CHAIMAE BOUAZZAOUI (Morocco) said her delegation agrees with Ms. POLLARD that the durability of the Organization’s financial situation depends on Member States’ contributions. She supported the Secretary-General’s budget proposals to accelerate the achievement of the Sustainable Development Goals and create a more inclusive multilateralism for the twenty-first century. The Organization needs to secure predictable and sufficient funding to achieve its goals and her delegation shares the concerns of Ms. POLLARD in that regard. The timing and amount of collections is critical for the Organization to achieve its mandates. She welcomed the budget proposal to invest in sustainable development and the proposed $4 million increase in the development pillar. The best solution is for all Member States to meet their obligations in full and on time. She noted that Morocco has fully paid its assessments to the regular budget as of 30 September.
GUO JINGNAN (China) aligning herself with the Group of 77 and China, said her country has informed the Secretary-General that it will soon pay the balance of its 2023 contributions and peacekeeping assessments, adding that China’s share of contributions has continued to see significant increases in recent years, “resulting in great financial pressure”. However, overcoming all difficulties and fully paying this year’s contributions and assessment sufficiently attests to its support for the work of the United Nations “through concrete actions”. She pointed out that the persistent refusal of an individual major contributor to pay its due contributions in full is the root cause of the Organization’s liquidity problem. No other measure to alleviate the liquidity issue can fundamentally resolve the problem. In addition to a sound financial situation, the UN must also guarantee the implementation of its various reform measures. Her delegation hopes that “the Secretariat will strengthen fiscal discipline, increase cost effectiveness and efficiency earnestly and make good use of every cent contributed by Member States”, she said.
GINA ANDREA SCHMIED (Switzerland) said the Organization’s financial situation is the mirror of Member States’ collective commitment. Its goals can only be achieved if Member States assume their role and responsibility by paying their contributions in full, on time and without conditions. “If good news does not arrive as soon as possible, the international community seems to have been unable to build this fundamental basis for cooperation in 2023,” she said. “Without the necessary liquidity, the implementation of each mandate risks being compromised.” Her delegation is aware of the increasing number of measures, from the temporary suspension of recruitment to further reductions in non-staff costs, that the Secretariat has taken to bring the situation under control. She asked the Secretariat to provide delegates with an overview of its cost-cutting measures and an overview of what can be expected in the coming months.
ROSE SAKALA (Zambia) aligning herself with the Group of 77 and China and the African Group, said her country has put measures in place to ensure it consistently pays up its contributions by the first quarter — a departure from its previous third quarter arrangement. Zambia believes that timely settlement of assessed contributions is crucial to the functional running of the Organization. She expressed her delegation’s commitment to constructively engage on any proposal by the Secretary-General geared towards improving the management of the Organization’s resources and its liquidity situation. She further underscored the need for Member States to finance United Nations’ operations, enhance peacebuilding activities, multilateral collaborations and work towards Sustainable Development.
PAUL EDWARD HANNA (United States) said that as the largest contributor to the Organization, the United States takes its financial obligations seriously and believes in transparency. The Government is making a regular budget payment of about $200 million in October and an additional payment in November. The sequencing of its payments is consistent with its practice in recent years. Regarding United States arrears to the regular budget, they stand at $222 million as of 1 January 2023. Yet as a percentage of the regular budget, United States arrears are at their lowest level since 1984. “This bears repeating, U.S. arrears are lower than they have been in each of the last 38 years,” he said, noting this as a demonstration of the United States’ financial commitment to the United Nations. Turning to its peacekeeping arrears, he said they are sizeable but more than $350 million of them are “ancient arrears” and owed to long closed missions. While important, these arrears do not have any bearing on the liquidity of the regular or peacekeeping budget. His delegation is in constant communication with Secretariat officials on that matter, he said.
Responding to delegates, Ms. POLLARD thanked Member States for their interest and agreed that the Organization cannot run on cash conservation measures and mandates need to be implemented based on approved budgets. She hoped the Organization will receive substantial contributions in the coming weeks so the financial situation going into next year will be more comfortable.
CHANDRAMOULI RAMANATHAN, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, said information about the timing of payments is as important as the time of the payments. Responding to the Swiss delegate’s question about the Secretariat’s cost-cutting measures, he said it temporarily suspended hiring in mid-July as collections had fallen behind. This created serious problems despite a good liquidly situation at the year’s start. The Secretariat provided exceptions to the cost-cutting measures to be sure time- sensitive mandates were not impacted. The hiring suspension was expected to be lifted at the end of September but will need to be continued until year’s end unless the financial situation “improves dramatically”. In late September, restrictions were placed on spending of about $60 million in non-post expenditures across the Secretariat, including about $20 million for special political missions, to provide a buffer in case the Organization ran out of cash.
”As we speak now, we still don’t have enough cash,” he said, after the Secretariat has borrowed from the Working Capital Fund and Special Account in recent months. He said the incoming payments will tide the Organization over for November while the situation for December depends on payments. “We would like to see the announcements translate into money in the bank before we decide to relax any restrictions,” he said, adding that payroll starts going out in the middle of month. The Secretariat has no intention of increasing any restrictive measures. Yet even if collections reach 100 per cent before year’s end, which is unlikely, the Organization will start 2024 in a worse financial situation than 2023. Cash goes down because of the return in credits. Rigidity in the Organization’s financial regulations can be reasonably addressed so operations can run more smoothly. “We need more certainty,” he said, adding the structural rigidities must be reduced.