New York: A severe cash shortfall is forcing the United Nations to slash spending and freeze hiring, jeopardizing its ability to deliver on mandated programs 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.
According to EMM, 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, and 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 the year's end, with opportunities being lost to implement planned activities and deliver results within the budget year.
Switzerland's representative, speaking also for Liechtenstein, emphasized that each delay in payment, each hiring freeze, and each canceled interpretation service chips away at the trust in the UN's collective ability to uphold decisions, stressing that this is not merely a budgetary issue but a question of credibility.
The United Kingdom's delegate highlighted the importance of reaching an agreement on harmonizing the practice for credit returns and clarifying the criteria for special commitments. This is seen as key to addressing the impact of late unknown contributions. The UK insists that Member States must have clarity on year-end credit returns, protect mandate implementation, and allow for timely amendments to the UN's financial rules and regulations.
Kazakhstan's delegate underscored that financial discipline is a matter of credibility and solidarity, expressing the country's readiness to explore practical and consensus-based solutions, including those outlined in the Secretary-General's report on improving the UN's financial situation.
Norway proposed several measures to provide the UN Secretariat with the flexibility it needs, acknowledging that these will not solve the root cause of the liquidity crisis - that not all Member States are paying in full and on time. Norway urged the Secretary-General to be bold in his approach to the UN80 initiative, calling on Member States to ensure its success.
The Russian Federation stressed that the responsibility of all Member States to pay their contributions in full cannot be replaced by additional budgetary instruments. The Russian delegate called for more transparency and emphasized that cash-saving measures should be proportionate and not undermine the functioning of key intergovernmental bodies.
Concerns were further raised by the European Union regarding the $2.4 billion in unpaid regular budget assessments and a $2.7 billion cash shortfall facing peacekeeping operations. The EU representative called for additional measures to minimize the impact of late or non-payments without placing greater burdens on those who consistently meet their obligations.
Singapore, representing ASEAN, expressed regret that the UN's chronic liquidity problem has become part of its operating assumptions, noting that the Organization is forced to operate at 83% of its approved budget with an extended hiring freeze, impacting mandate delivery.
Iraq's delegate, speaking for the Group of 77 and China, highlighted that one Member State is responsible for over half of all unpaid assessments, despite having the capacity to pay. This withholding is being done for political reasons by a Member State that benefits from the financial architecture's structural imbalance.
The discussions followed a 9 May financial update by the Secretariat, where concerns about trailing budget collections were raised. UN Management Chief Catherine Pollard provided updates on payments received from Member States since that briefing, with a few countries having paid their dues in full for various budgetary categories.