Is The United Nations Going Bankrupt?

The UN says it is quickly running out of cash because many of its member states have not paid their annual contributions. With just over 70% of contributions to the UN’s regular budget paid, member-states still owe the organization $1.2 billion for this year. Is The United Nations Going Bankrupt?

More than 130 million people across the world rely on humanitarian assistance and protection from the UN.

The United States, which is the UN’s largest contributor, recently paid the organization $180 million to relieve some of the financial pressure but still owes close to a billion dollars.

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Calling it the UN’s ‘deepest deficit of the decade’, Secretary-General Antonio Guterres warned that the international organisation’s “work and reforms are at risk” if member-states do not pay their contributions in full.

But is this a symptom of a deeper crisis facing the organization? And what will it take to save it from bankruptcy?

Information On The Current United Nations Cash Crisis

The United Nations is facing a severe shortage of cash, and unless more Governments pay their annual dues, “our work and our reforms are at risk”, the UN chief António Guterres has warned Member States.

In a statement issued by his Spokesperson, on 8 October, the Secretary-General said he had written to Member States, “about the worst cash crisis facing the United Nations in nearly a decade.

The Organization runs the risk of depleting its liquidity reserves by the end of the month and defaulting on payments to staff and vendors.”

UN Spokesperson Stéphane Dujarric told correspondents that all nations needed to pay their dues “urgently and in full”, adding that “this is the only way to avoid a default that could risk disrupting operations globally.”

The full story from our UN News website, including the UN chief’s statement to the Fifth Committee, can be found here, and you can also check for updates on the cashflow crisis on the website of the Office of the Spokesperson for the UN Secretary-General.

Despite Averting Cash Crisis, Key United Nations Mandates Will Suffer Unless Vicious Cycle of Liquidity Shortages Eases, Management Chief Warns Fifth Committee

The delivery of essential United Nations mandates will suffer unless they act to ease the vicious cycle of liquidity shortages in the regular budget, the United Nations top financial official warned delegates in the Fifth Committee (Administrative and Budgetary) today as she discussed the Organization’s semi-annual financial situation.

Catherine Pollard, Under-Secretary-General for Management Strategy, Policy and Compliance, said liquidity management has recently proved effective and the Organization did not have to use the Special Account or available cash in closed peacekeeping operations in 2021.

Yet the liquidity crisis will recur in 2023 and deepen in 2024, due to the return of credits, unless mitigation measures are taken to address the underlying causes.

“While we may have averted a cash crisis and a disruption of operations, budget implementation and mandate delivery have been hampered by the tight expenditure controls,” said Ms. Pollard, adding that the postponement or cancellation of several activities and outputs will be reflected in the performance reports.

She provided an overview of the Organization’s finances by focusing on four main financial indicators: the amounts of assessed contributions; unpaid assessed contributions; available cash; and outstanding payment to Member States.

While the cut-off date for inputs for the presentation was 30 April 2022, Ms. Pollard provided updates throughout her presentation.

Monthly regular budget collections keep fluctuating significantly each year, which makes efficient and effective implementation of the budget more difficult, she said.

The large collections towards the last quarter require careful liquidity management to ensure operations are not disrupted during the year.

At the end of April 2022, collections fell short of estimates by $202 million, partially negating a positive start to the year. In recent years, the deepest deficits were $488 million in October 2018, $520 million in November 2019 and $334 million in December 2020.

Turning to peacekeeping operations, she said that as of 30 April 2022, the cash balance stood at $2.1 billion in the accounts of active missions, closed missions and the Peacekeeping Reserve Fund.

Total liabilities for payments to Member States for troops, formed police units and contingent-owned equipment amounted to $37 million for active peacekeeping missions and $86 million for closed ones.

In introducing the Secretariat report on the updated financial position of 29 closed peacekeeping missions as of 30 June 2021, Chandru Ramanathan, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget in the Department of Management Strategy, Policy and Compliance, warned that the structural problems afflicting liquidity are still unresolved and likely to impact the liquidity situation again.

Regular budget collections in 2021 exceeded estimates, which would help budget implementation for 2022. But the unspent funds for 2021 and the cancellation of commitments for 2020 will impact liquidity for 2023, as these will be reduced from the assessments from Member States for the 2023 budgets.

Therefore, the ability to borrow from closed peacekeeping missions remains imperative to secure a lifeline for the regular budget in the coming financial periods, she said.

Pakistan’s delegate, speaking on behalf of the “Group of 77” developing countries and China, noted that 5 of the 20 closed missions had a cash deficit of $85.6 million dollars, which is mainly a result of outstanding payments of assessed contributions from the Member States.

Expressing great concern that the cash deficit situation prevents these missions from fulfilling their obligations, not only to vendors, third-party claims and Member States, but to troop- and police contributing countries, she pointed out that some of these liabilities have been outstanding for many years.

The Group looks forward to new strategies from the Secretary-General to resolve this situation, rather than borrowing from closed peacekeeping operation accounts to meet cash shortfalls in the regular budget, she said.

Juliana Gaspar Ruas, Vice-Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced that body’s related reports on the closed peacekeeping missions.

The delegates then turned their attention to the financing of two peacekeeping missions: the United Nations Organization Stabilization Mission in the Democratic Republic of Congo (MONUSCO) and the United Nations Mission in South Sudan (UNMISS).

Mr. Ramanathan introduced the Secretary-General’s reports on their budget performance for the period from 1 July 2020 to 30 June 2021 and the proposed budget for the 2022/23 year.

He said the proposed 2022/23 budget for MONUSCO amounts to $1.03 billion, a 0.5 per cent decrease from the 2021/22 approved budget, and for UNMISS it is $1.1 billion, an increase of 0.7 per cent over the 2021/22 year, primarily a result of higher fuel prices and increased requirements for civilian personnel.

Ms. Gaspar Ruas introduced the Advisory Committee’s related report while Fatouma Ndiaye, Under-Secretary-General for Internal Oversight Services, introduced a report from the Office of Internal Oversight’s Inspection and Evaluation Division.

The latter report outlined an evaluation of MONUSCO’s effectiveness in providing support to the rule of law and security institutions in the Democratic Republic of the Congo.

Kenya’s delegate, speaking on behalf of the African Group, said it will seek to understand the rationale behind the significant over-expenditures in the two missions and the measures both missions are proposing in line with the environmental strategy to ensure full compliance with agreed rules and regulations.

The Fifth Committee then turned its attention to accessibility for disabled persons throughout the United Nations system. Martha Helena Lopez, Assistant Secretary-General for Human Resources, introduced the Secretary-General’s report on the Secretariat’s efforts to enhance accessibility for such persons to conferences and meetings through the United Nations system. Ms. Gaspar Ruas introduced the Advisory Committee’s related report.

In the afternoon, the Committee turned its attention to the Board of Auditors report for the United Nations peacekeeping operations for the 12-month period ending 30 June 2021.

Valentina Monasterio Gálvez, Director of External Audit of Chile and Chair of the Audit Operations Committee of the United Nations Board of Auditors, introduced the Board’s report.

Maria Costa, Director of the Finance Division of the Office of Programme Planning, Finance and Budget, Department of Management Strategy, Policy and Compliance, introduced the Secretary-General’s report on implementation of the Board’s recommendations, and Ms. Gaspar Ruas introduced the Advisory Committee’s related reports.

Is The United Nations Going Bankrupt?

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