Member States’ Timely Payment of Assessments by Year’s End Key to Stopping Organization’s Liquidity Crisis from Worsening, Top Management Official Tells Fifth Committee
The United Nations senior management official told delegates in the Fifth Committee (Administrative and Budgetary) today that if fourth-quarter collections of assessments from Member States do not arrive as estimated, the Organization could end 2024 with a cash deficit that would place more liquidity pressure on the Organization’s finances in 2025.
In her semi-annual address on the Organization’s financial situation, Catherine Pollard, Under-Secretary-General for Management Strategy, Policy and Compliance, said stringent cash conservation measures have been in place for the last few years to keep the Organization running smoothly and avoid the risk of exhausting its cash reserves.
This ongoing liquidity management has meant the cash deficit in the regular budget emerged later each year from 2018 to 2021. While no cash conservation was required in 2022, a drop in collections in 2023 and 2024 warranted active liquidity management once again. “We, therefore, needed to conserve cash by reducing and slowing down expenditures until we have more clarity on collections,” she told delegates.
In May, the Secretariat revised its collection forecast from 94.7 per cent to 97.5 per cent, due to a larger collection of arrears. “This means that some of the worst-case scenarios initially contemplated are less likely to happen,” she said. “However, this is still short of the minimum target to be able to execute the budget in full.” The heads of entities have been given maximum autonomy to manage their post and non-post budgets within a reduced financial ceiling. “Each department/entity is trying its best to minimize the impact on mandate delivery but cannot avoid negative impact on proper or full mandate delivery,” she said, adding the effect will vary depending on each entity’s funding model, such as the proportion of post and non-post budgets.
Presenting the Organization’s key financial indicators for 2024, Ms. Pollard provided details on three main categories — the regular budget, peacekeeping operations and the international tribunals.
Monthly Budget Collections Keep Fluctuating: Planning Difficult
Chart 1 details how monthly regular budget collections keep fluctuating significantly each year, making it difficult to plan budget implementation efficiently or effectively. The UN collected $134 million more than anticipated in the first quarter of this year, and $178 million more than anticipated in the second quarter, due partly to some Member States paying earlier than expected. The Organization remained ahead of its estimated collections by $58 million at the end of the third quarter. “While this is a positive sign, collections in the last quarter of the year are far from certain and our collection forecast is still short of the liquidity needed to execute the budget in full,” she warned.
In September, the Secretariat borrowed the Working Capital Fund’s full amount and may need to borrow from the Special Account this month, leaving only about $130 million of surplus cash in the closed tribunals as a last liquidity buffer, she told delegates. “We now await the outcome of the fourth quarter,” she said, adding that “predictability in the timing and amount of collections is critical in managing the Organization’s cash outflows and planning spending properly and safely without risk of payment default”. She again appealed to Member States to commit to paying earlier and to communicate their payment plans as early as possible. “The more confident we can be about collections; the greater will be our ability to commit funds when we need them for programme delivery,” she said.
Chart 4, which summarizes the status of regular budget assessments, indicates that unpaid assessments totalled $1.5 billion as of 30 September 2024, up from $1.3 billion as of 30 September 2023. Calling this a “worrisome trend”, Ms. Pollard said “collections in the final quarter remain critical for the outcome of 2024. We hope collections will pick up as large arrears deplete liquidity reserves.”
Unpaid Assessments Total $1.5 billion
Chart 5 shows that 141 Member States have paid their regular budget assessments in full as of 30 September 2024, up from 137 a year earlier. She hoped the Organization would exceed the 2021 record of 153 Member States paying in full by year’s end. Chart 6 lists the 141 Member States that have paid in full while Chart 7 lays out the 52 who have yet to pay $1.5 billion in assessments as of 30 September 2024, four less than last year. [According to Chart 8, the United States is responsible for the largest outstanding assessment at $995 million; followed by China at $381 million; Argentina at $42 million, though it subsequently made a partial payment; and Venezuela at $36 million.
Peacekeeping Operations Finances
Ms. Pollard then turned to peacekeeping operations, whose financial periods run from 1 July to 30 June rather than the calendar year. Chart 9 shows the status of peacekeeping assessments and collections by 30 September 2024 for the five most recent fiscal years. By September 2024, assessments issued for the 2024/25 fiscal year totalled $2.5 billion, with $2.1 billion of it being assessed in July for mandated periods. The lower level of assessments for July‑September 2024, compared to the same period in 2023, is attributed to operations with effective mandates that could not be billed beyond 31 December 2024, due to the absence of a 2025 scale of assessment. Another reason is assessments could not be fully issued for operations waiting for the Security Council to extend their mandate.
Total payments and credits in the last four fiscal years have ranged from $2.6 billion to $3.7 billion, resulting in unpaid contributions, as a percentage of assessments, stretching from 63 per cent to 92 per cent. As of 30 September 2024, this percentage stood at 74 per cent due to significant receipts from one Member State during August and September. That compared to 79 per cent during the previous fiscal year when the scale had yet to be approved. “Without demonstrated commitments from Member States to make any remaining payments in full and on time, the current liquidity problems facing peacekeeping operations will continue and could impact the reimbursement of troop‑ and police‑contributing countries,” she said.
International Tribunals Finances
Turning to the international tribunals, listed in Chart 17, she said total contributions outstanding stood at $55 million as of 30 September 2024. This includes amounts for the International Criminal Tribunal for Rwanda, which was last assessed in 2016; the International Criminal Tribunal for the Former Yugoslavia, which was last assessed in 2018; and the most recent assessment for the International Residual Mechanism for Criminal Tribunals in 2024.
In closing, Ms. Pollard said the Secretariat is committed to using the resources entrusted to it efficiently and effectively and will use the “utmost transparency” to provide information to Member States. She thanked Member States making predictable and timely payments to help improve the Organization’s financial situation, stressing: “The full and efficient implementation of our programme of work depends on the financial support of Member States through the adoption of realistic budget levels and the provision of timely contributions to ensure a stable and predictable financial situation throughout the year”.