Budget Committee Confronts United Nations' Chronic Cash Crisis
Russian Federation Proposes 10-20 Per Cent Withholding of UN Staff Salaries
To ease the Organization’s chronic cash crisis, the United Nations senior management official today presented the Fifth Committee (Administrative and Budgetary) with a set of targeted measures that go beyond reduced services, hiring freezes and other spending restrictions.
The Secretary-General’s third report on “Improving the financial situation of the United Nations” (document A/79/734) requests that the General Assembly address the practice of returning unspent money to Member States — including those that have failed to pay their dues. This practice could discourage on-time, full payments, reward late or non-payments and exacerbate the cash shortage, which in turn hinders the implementation of budgeted programmes.
“If we do not spend money because we did not receive it, we still have to return the unspent money later, even to those who never paid and even if the cash has not been collected,” said Catherine Pollard, Under-Secretary-General for Management Strategy, Policy and Compliance, stressing that the proposals in the latest report seek to address this issue.
The Assembly was also requested to approve the continuation of cash-pooling among active peacekeeping missions, beyond the trial period expiring in June 2027, as it is beneficial for the timely settlement of payments to troop- and police-contributing countries.
“The proposals in the report are in no way meant to diminish the responsibility of Member States to pay in full and on time,” said Ms. Pollard, adding that the Secretariat’s outreach to Member States and successive years of spending restrictions have raised their awareness of the difficult liquidity situation. “However, the payment patterns of the largest contributors have significantly impacted the overall liquidity situation.” She said the Secretary-General fast-tracked this third report, originally scheduled for release at the General Assembly’s eightieth session, because of the recurring liquidity crisis.
Delegates Ramp Up Demands for Timely Payments
Delegates today escalated their persistent calls for all Member States to pay their contributions in full and on time to avert the increasingly severe liquidity crisis and let the Organization deliver its mandates. “Mandate delivery must be the driver of budget implementation,” said Iraq’s representative, speaking for the Group of 77 and China. “We are deeply concerned that cash availability has repeatedly become a dominant factor potentially hindering mandate delivery.” He said delegations should be consulted before austerity measures that could impact the main organs of the United Nations are carried out.
Singapore’s delegate, speaking for the Association of Southeast Asian Nations (ASEAN), noted that when budgets are not fully spent due to the lack of liquidity, the United Nations Financial Regulations and Rules require unspent funds to be returned to all Member States, including those that have not paid in full. “This exacerbates liquidity shortages and could disincentivise on-time payments,” she said, adding that ASEAN is keen to explore the Secretary-General’s proposal to align the return of credits practice in the regular budget with that of the peacekeeping operation budget. “We will also carefully consider the proposals for the temporary suspension of the return of credits for regular budget operations, cash-pooling of peacekeeping resources, and the use of surplus cash of closed tribunals as a last resort for active peacekeeping operations.”
ASEAN is concerned about the ongoing liquidity situation’s impact on the Organization’s work at Headquarters, at duty stations and in peacekeeping missions. “In particular, we were dismayed to learn that it had been necessary to borrow funds from the closed tribunals in the last two months of 2024 to make up for the cash deficit in the regular budget,” she said. While 2025 started well, collections started lagging in February. “Unfortunately, even an optimistic outlook for 2025 indicates that the UN might run out of cash by October of this year,” she added.
As a result of proposals made by the Secretary-General in his previous reports on this issue, Ms. Pollard said the Assembly approved an increase in the Working Capital Fund by $100 million from January 2023, using available credits. It also allowed the surplus cash of closed tribunals to be used as a last resort for the regular budget’s liquidity. For peacekeeping operations, the Assembly approved advance assessments, cash-pooling and the use of a major part of the Peacekeeping Reserve Fund for the liquidity of active peacekeeping operations.
“Each of these measures has been helpful in alleviating symptoms, but they have not been adequate to solve the problem,” said Ms. Pollard. “There is truly only one real solution to the underlying problem, which is that all Member States pay in full and on time. However, some Member States do not pay in full and most Member States do not pay on time.”
Sustainable Remedies Urgent
Noting that the crisis’ root cause remains unresolved, the representative of the European Union, in its capacity as observer, said her delegation keeps advocating for sustainable remedies to the liquidity “downward spiral”, which harms the Organization's performance and undermines its relevance. She reiterated support to amend the Financial Regulations and Rules in order to approve the return of credits for the regular budget, peacekeeping and tribunals in a consistent manner. The delegation also welcomes the permanent approval of cash-pooling among the peacekeeping missions and calls for further discussions on how the well-established practice of cash-pooling could be expanded to benefit all mandates.
She emphasized the importance of liquidity-bridging mechanisms and urged delegates to closely monitor all liquidity reserves and complementary mechanisms, ensuring they are fit for purpose. While ready to analyse additional measures, she said “these solutions should not be detrimental to Member States that pay their dues in full and on time, such as the European Union member States”.
While commending the proposal to harmonize the regular budget’s return of credits practice with peacekeeping operations, the representative of the United Kingdom also advised caution. “Such measures are essential to providing consistency and integrity across United Nations budgets, ensuring the fair treatment of all contributors,” he said. “At the same time, it’s important that measures do not unduly penalize responsible contributors.” For this reason, his delegation is concerned with the proposal for an automatic mechanism for the retention of returnable credits.
Mexico’s representative said his delegation values the four proposals outlined in the Secretary-General’s report as they help understand and address the systemic, cyclical and managerial deficiencies. These deficiencies then hinder efficient planning and generate distortions in budget execution. “Addressing this problem must go beyond reactive measures or temporary solutions,” he said. “A comprehensive solution is necessary.”
Speaking on behalf of the Caribbean Community (CARICOM), the representative of the Antigua and Barbuda detailed the measures — such as negotiating delayed payments to some United Nations system partners, delaying internal funds transfers, using funds blocks, reducing allotments and financial ceilings, slowing down or freezing hiring — that the Secretariat has taken at the operational level to cope with the worsening liquidity situation and manage cash flows. “While these measures have provided temporary relief, they are neither sustainable nor conducive to the full, effective implementation of the Organization’s mandates,” he said, adding that CARICOM supports the exploration of additional exceptional measures to increase liquidity reserves, including the use of the cost-recovery accumulated surplus.
Member States Losing Control of Budget Process
“Austerity has become normalized, with restrictions affecting recruitment, conference and translation services, as well as the implementation of budgetary decisions made by Member States in these areas,” said Switzerland’s delegate, also on behalf of Liechtenstein, adding: “If we do not provide the Organization with the necessary resources, we also lose part of our control over the budgetary process.”
The Russian Federation’s representative called on the Secretary-General for more targeted and intensive work towards abolishing illegal unilateral sanctions and artificial barriers that prevent some Member States from paying their contributions. He also asked the Secretary-General to withdraw austerity measures that were introduced without prior consultations with Member States and lay down priority actions to ensure the work of the main Charter bodies, primarily the Security Council and the General Assembly, are not disrupted. In light of the critical liquidity situation, he proposed, among other actions, to temporarily withhold 10 per cent of the salaries of General Service and Professional staff at the P-1 to P-4 levels, as well as 20 per cent of salaries for staff at the P-5 level and above, for up to six months.
Juliana Gaspar Ruas, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced that body’s related report (document A/79/803). ACABQ believes that a sustainable solution to the liquidity situation remains contingent on the full and timely receipt of contributions. The Advisory Committee sees merit in the proposal to align the practice of return of credits between regular budget and peacekeeping operations. However, the proposal to temporarily suspend the return of credits requires further clarity and falls within the Assembly’s purview.
Revised Estimates for Human Rights Council
Chandramouli Ramanathan, Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, presented the Secretary-General’s report “Revised estimates resulting from decisions adopted by the Human Rights Council at its eighteenth organizational session”(document A/79/575/Add.1).
The Secretariat requests approval of an additional appropriation of $871,400 for 2025, arising from requests contained in the President’s Statement “Efficiency of the Human Rights Council: addressing financial and time constraints,” (document OS/18/1). This statement was adopted 9 December 2024 after consideration of the body’s significantly increased workload. No provisions had been made in the 2025 programme budget, he said.
Ms. Gaspar Ruas introduced the Advisory Committee’s related report (document A/79/7/Add.47).
The representative of Uruguay, speaking on behalf of the Bahamas, Chile, Costa Rica, Dominican Republic, Ecuador, Guatemala, Honduras, Mexico and Paraguay, said adequate and predictable financing of the mandates emanating from the resolutions and decisions adopted by the Human Rights Council are a cardinal priority for the delegations. They support the approval of the additional resources in their entirety. He reaffirmed that the Fifth Committee's negotiations should not be used as a means to undermine already established mandates and validly adopted decisions.