Despite More-than-Expected Regular Budget Collections, Under-Secretary-General Tells Fifth Committee ‘No Room for Complacency’ to Ensure Improvement over Year-End 2023
The United Nations senior management official told delegates in the Fifth Committee (Administrative and Budgetary) today that the United Nations 2024 regular budget has the potential to be “as bad or worse” than year-end 2023 unless collections significantly exceed the average of the last five years.
As she laid out the Organization’s principle financial indicators — the amounts of assessed contributions, unpaid assessed contributions, available cash and outstanding payment to Member States — during the Secretariat’s semi-annual financial presentation, Catherine Pollard, Under-Secretary-General, Management Strategy, Policy and Compliance, said that while collections so far in 2024 have been better than anticipated, “there is no room for complacency. The improved situation is partially due to payment of arrears but does not necessarily point to a better situation for the year-end compared to last year.”
Despite starting 2023 with a regular budget cash surplus, the Organization ended 2023 with a cash deficit of more than $400 million. Monthly regular budget collections continue to fluctuate significantly each year, making it difficult to safely commit funds in time to implement the budget efficiently or effectively. “The large collections towards the last quarter necessitate careful liquidity management to ensure that operations are not disrupted during the year,” Ms. Pollard said. “A healthy cash balance at the start of the year is therefore very important for effective and efficient programme delivery without liquidity restriction.”
For example, first-quarter collections were 42 per cent in 2022 and 2023 and have increased to 52 per cent in 2024, she said. By the end of the second quarter, collections were 58 per cent in both 2022 and 2023 and final collections in 2022 and 2023 were 102 per cent and 82 per cent, respectively. In the last quarter of 2023, the Organization collected $548 million, compared to $896 million during the same period in 2022.
“For most of 2023, cumulative monthly collections trailed estimated collections and we ended the year trailing estimates by $529 million,” she said, adding cumulative collections of assessed contributions trailed estimates during each quarter of 2023 and are the lowest of the last five years in each quarter.
At the end of April of this year, collections surpassed estimates by $244 million, due in part to the collection of 71.8 per cent of arrears — the largest percentage collected at the end of April since 2021, she said, explaining that: “When there are large arrears in the previous period, collections at the beginning of the year tend to be greater”.
Pointing to Chart 2, she said progressively more stringent cash conservation measures in 2020 and early 2021 effectively reduced the risk of disrupting operations or exhausting all liquidity reserves. These measures meant the regular budget cash deficit occurred later each year and reduced the size of the deficit since 2019. In 2018, borrowing from the Working Capital Fund occurred as early as May and was postponed until July in 2019, September in 2020 and November in 2021. In recent years, the deepest deficits have been $488 million in October 2018, $520 million in November 2019, and $334 million in December 2020. In 2021 and 2022, the full amount of the Working Capital Fund was borrowed towards the end of the year, but it was not necessary to use either the Special Account or the cash available in closed peacekeeping operations.
“However, in July 2023, as the liquidity for regular budget operations remained highly uncertain and unpredictable, we were forced to impose temporary suspension of hiring and also curtail non-post spending to ensure adequate liquidity for paying salaries and allowances to staff and other personnel, as well as vendor commitments,” she told delegates. The Secretariat borrowed from the Working Capital Fund in August and from the Special Account in October and by year’s end exhausted the Fund of $250 million and a major part of the Special Account. “The depletion of the regular budget liquidity reserves at the beginning of 2024 necessitated imposing earlier and more stringent cash-conservation measures for 2024,” she added.
The Organization began 2023 with unpaid assessments of $330 million as assessments of $2.99 billion were issued during the year. Payments received from Member States during 2023 totalled $2.5 billion, compared to over $3.0 billion in 2022. “This had the effect of increasing the year-end unpaid assessments to $859 million, a new record,” she said. For 2024, assessments of $3.22 billion were issued, up from $231 million in 2023. Payments received by 30 April 2024 totalled $2.4 billion, including $545 million for prior period arrears, resulting in an unpaid contribution of $1.71 billion — with the United States owing $994 million and China owing $381 million — compared to $1.8 billion at the same time in 2023.
Turning to peacekeeping operations, which run on a 1 July to 30 June financial cycle, she pointed to Chart 10 and said assessments of nearly $6 billion have been issued and $5.6 billion had been received by the end of April 2024. This resulted in an overall outstanding amount to peacekeeping operations of $2.6 billion, which also includes arrears. “The actions taken by Member States in the next two months will determine the final situation of the current fiscal year,” she added.
Chart 11, which provides an overview of unpaid assessments, shows the $2.6 billion outstanding as of 30 April, including $2.1 billion owed for active missions — including $1.8 billion for the current fiscal year and $356 million for prior fiscal periods — and $495 million for closed missions.
Chart 12 lays down the status of assessed contributions for active operations for each of the past 10 financial periods and the current fiscal year. “This shows a worrisome trend as unpaid assessments have not gone down despite declining peacekeeping assessments,” she said. With only two months remaining in the current fiscal year, the unpaid contribution-to-assessment percentage is 36 per cent and a minimum of about $470 million is needed.
Turning to the international tribunals, she said total contributions outstanding as of 30 April 2024 were $73 million — including for the International Criminal Tribunal for Rwanda, which was last assessed in 2016; the International Criminal Tribunal for the Former Yugoslavia, last assessed in 2018; and the most recent 2024 assessment for the Mechanism for International Criminal Tribunals. Chart 22 indicates the current positive cash positions. The final 2024 outcome will depend on Member States continuing to honour their financial obligations to the Tribunals.
“Without the prompt and decisive action of Member States to address the historical unpredictability and delays in the receipt of assessed contributions, peacekeeping missions will be unable to effectively implement their mandates,” she warned. “It is therefore crucial that Member States meet their financial obligations in full and on time in order for this situation to be addressed.”