Severe Cash Shortfall Exposing United Nations to Growing Reputational Risk, Speakers Warn, as Fifth Committee Discusses Organization’s Worsening Financial Situation
Delegates Propose Creating Mechanism to Defer Mandatory Return of Member States’ Unspent Funds at Year’s End as ‘Protective Buffer’ against Operational Paralysis
A severe cash shortfall is forcing the United Nations to slash spending and freeze hiring, jeopardizing its ability to deliver on mandated programmes and exposing the Organization to growing reputational risk, the Fifth Committee (Administrative and Budgetary) heard today, as Member States explored potential solutions to the liquidity crisis.
Among the proposed remedies under discussion is a revision to the long-standing rule requiring unspent funds at year-end to be returned to Member States as credits. The UN regular budget operates on a calendar-year basis. When Member States make their assessed payments late in the year — especially in November or December — the Organization has very little time to use those funds. As a result, much of the money remains unspent by year’s end, with opportunities being lost to implement planned activities and deliver results within the budget year.
“Each delay in payment, each hiring freeze, each cancelled interpretation service chips away at the trust in our collective ability to uphold the decisions we take,” said Switzerland’s representative, speaking also for Liechtenstein, warning that this is not merely a budgetary issue, but a question of credibility.
He expressed support for the creation of a conditional, time-limited mechanism that allows the Secretariat to defer credit returns when the programme implementation rate falls below 90 per cent and when the liquidity situation is such that it could threaten delivery in the following year. This mechanism is a “protective buffer designed to give the Organization enough breathing room to avoid paralysis in early January when incoming contributions are often delayed”, he said.
Exceptional Use of Special Commitment Extra-Budgetary Authorization for Unexpected, Urgent Matters
He also supported the exceptional use of special commitments — extra-budgetary authorizations approved by the UN General Assembly to fund unexpected or urgent activities not included in the regular budget — during the first quarter of the year. This would allow the Secretariat to maintain operational momentum and avoid the premature return of unspent but still-needed resources. “None of these proposals are radical,” he said, as those are “not a call for new resources”, nor for increased flexibility without oversight.
The United Kingdom views agreement — on harmonizing the practice for credit returns and clarifying the criteria for special commitments — as key to addressing the impact of late unknown contributions, its speaker said, stressing that Member States must have clarity on year-end credit returns, protect mandate implementation and allow for the timely presentation of amendments to the Organization’s financial rules and regulations. “We must engage constructively, leave accusations over payment patterns at the door, and focus exclusively on sustainable solutions that benefit the UN’s mandate delivery,” he insisted.
Financial Discipline by Member States Key for United Nations Credibility
“Financial discipline is not just an accounting matter, but a matter of credibility, of solidarity and of our collective ability to implement mandates entrusted to the United Nations by Member States,” said Kazakhstan’s delegate, stating his country’s readiness to explore practical and consensus-based solutions, including those outlined in the Secretary-General’s report on “Improving the financial situation of the United Nations” (document A/79/734).
Norway has proposed several measures to provide the UN Secretariat with the flexibility it needs, its delegate said, adding: “We are also aware that this will not solve the underlying cause of the liquidity crisis — that not all Member States are paying in full and on time.” Calling on the Secretary-General to be bold, radical and ambitious in his approach to the UN80 initiative, he said Member States must do their part in ensuring its success.
More Transparency Needed of Cash-Saving Measures
“Any discussion of additional budgetary instruments, be it special commitments, return of credit or cash pooling, cannot replace the fundamental principle — the responsibility of all Member States” to pay their contributions in full, the Russian Federation’s delegate stressed. Further, measures responding to liquidity shortages should be proportionate and not undermine the functioning of key intergovernmental bodies. Expressing concern that cash-saving measures are being implemented unilaterally, he called for more transparency. Even temporary restrictions, such as those for statutory bodies, must be drafted in consultation with Member States, he stressed. States with the greatest financial capacity and whose share of the Organization’s budget is the largest must show leadership, he said.
Impact of $2.4 Billion in Outstanding Regular Budget Assessments Draws Ire
The representative of the European Union, in its capacity as observer, sounded the alarm at the data presented by the Secretariat, particularly the $2.4 billion in unpaid regular budget assessed contributions as of 30 April — up from $1.7 billion the previous year — and a $2.7 billion cash shortfall facing peacekeeping operations. “These are not abstract figures; they represent real operational risks, deferred mandates and delayed payments to countries contributing personnel and resources,” she said.
Additional measures to minimize the impact of late or non-payments must not place greater burdens on those who consistently meet their financial obligations, such as the bloc’s member States, she said. The Union will continue to support the Organization, where possible, by advancing payments and volunteering upgraded assessment categories for peacekeeping operations, she pledged, adding: “But let us be clear: the burden cannot fall on a few. The solution lies in universal, timely, and full payment by all Member States.”
Singapore’s representative, speaking for the Association of Southeast Asian Nations (ASEAN), expressed regret that “the UN’s chronic liquidity problem has simply become part of the Organization’s operating assumptions”. Noting that the UN is being forced to operate at 83 per cent of its approved budget, along with an extended hiring freeze until August, he said that “this has no doubt affected mandate delivery in some areas, especially given the uneven distribution of liquidity across the various UN departments”.
The Economic and Social Commission for Asia and the Pacific (ESCAP) has had to resort to strict liquidity mitigation measures due to the withholding of approved regular budget resources, he noted. These include the closure of its secretariat building and on-site working space to all staff from May to August, and restrictions on all staff travel, meetings and hiring of experts and consultants. This is particularly concerning as ESCAP is the biggest regional commission with 60 per cent of membership from countries in special situations.
One Member States Responsible for Over Half of Unpaid Assessments
Iraq’s delegate, speaking for the Group of 77 and China, said that it is especially troubling that one Member State is currently responsible for over half of all unpaid assessment to both the regular and peacekeeping budgets, “despite its capacity to pay”. Further, this withholding is being done for political reasons, by a Member State that “already benefited from structural imbalance in the Organization’s financial architecture and enjoys increased privileges with the Security Council”.
Today’s debate by Member States followed a 9 May semi-annual financial update to the Fifth Committee by the Secretariat, in which Chandru Ramanathan, UN Controller and Assistant Secretary-General in the Office of Programme Planning, Finance and Budget, cautioned that programme (regular) budget collections are trailing expectations. (See Press Release GA/AB/4498.)
The United Nations’ three core budget accounts — for programmes, peacekeeping operations and international tribunals — are all funded through assessed contributions, which are obligatory payments made by Member States based on a formula approved by the General Assembly, which factors in their capacity to pay.
UN Management Chief Gives Update on Member States Payments Since 9 May
Catherine Pollard, Under Secretary-General, Management Strategy, Policy and Compliance, opened today’s meeting by presenting some updates on the Secretary-General’s report “Financial situation of the United Nations” (document A/79/521/Add.1).
She said that, since the 9 May briefing, Djibouti and Mali have paid in full for the regular budget, which brings the total number of Member States having paid in full to 106. For peacekeeping operations, Djibouti and Egypt have paid all due assessments, bringing the total number of Member States having paid in full to 67. For the international tribunals, Denmark, Djibouti and Mali have paid in full, bringing the total number of Member States who paid in full for this category to 84. Djibouti and Denmark have paid in full for all categories, bringing the total to 61 Member States. In addition, payments have been received from Guatemala, Lebanon, Mali and Panama for peacekeeping operations, and Lebanon for the international tribunals, she reported.