The United Nations: “Cash Crisis”

By Cameron L. McIver

Introduction

The ability of the United Nations to conduct its core functions is in danger. In late 2019, Secretary-General António Guterres of the United Nations addressed the status of the United Nations regular budget to the Fifth Committee of the United Nations General Assembly, the body that oversees administrative and budgetary issues.[i] At the time, the Secretary-General described a severe liquidity crisis that the United Nations was facing due the availability of cash on hand.[ii] The Secretary-General attributed this crisis to Member States not paying their financial contributions in full and on time.[iii] Three years later, in his 2022 address to the Fifth Committee, the Secretary-General again shared the risk of another liquidity crisis.[iv] Despite facing these continued threats, the contribution history of Member States shows that they are not proactive in resolving this continued threat. A financial failure of the United Nations would be detrimental to its operations, and therefore, the United Nations must affirmatively act to prevent any future risk of a liquidity crisis.

Background

The United Nations regular budget is used to “finance the staff, capital and operating expenses of the UN Secretariat in the various UN locations.”[v] The regular budget funds activities including the operation of special political missions, oversight of sanctions implemented by the Security Council, and human rights monitoring and advocacy.[vi]Without proper funding of the regular budget, posts would not be filled, travel would be limited, meetings would be canceled, and many other functions of the United Nations would be impacted.[vii]

The United Nations regular budget gets its funding from Member States of the organization.[viii] The amount that each Member State is expected to contribute is determined by a formula that takes into consideration several factors, including Member States’ estimated gross national income.[ix] In addition to this formula, the amount must conform to several parameters, for example, the maximum one Member State may pay is 22% of the entire budget and the maximum the “least developed” Member States each may pay is 0.01% of the entire budget.[x] The largest contributor to the 2023 regular budget, the United States of America, is expected to pay 22% of the $3,217,716,300 budget, which totals to $707,897,586.[xi] The smallest contributors to the 2023 regular budget are expected to pay the mandated minimum of 0.001% of the budget,[xii] which totals to $32,177.[xiii]

After the General Assembly adopts the regular budget, it is the duty of the Secretary-General to transmit to the Members States notice of their expected contribution to the regular budget.[xiv] Upon receipt of this notice, contributions are due in full within 30 days.[xv] If a Member State’s contribution is not received by January 1^st of the following calendar year, the contribution is considered one year in arrears.[xvi] If the amount in arrears equals the Member State’s contributions due for the previous two years, the Member State will lose its vote in the General Assembly.[xvii] As of February 7, 2023, five member states are in arrears that equal the contributions due for the previous two years, but only two have lost their right to vote: Lebanon and the Bolivarian Republic of Venezuela.[xviii]

Analysis: Cash Crisis

The threat to the United Nations of a severe liquidity crisis is caused by the lack of cash on hand due to Member States not paying their financial contributions to the regular budget in full and on time.[xix] When the Secretary-General spoke to the Fifth Committee in late 2019, only 130 of the 193 Member States had paid their regular budget contributions in full, and out of those 130 Member States, only 34 paid within 30 days of receiving notice of their expected contribution.[xx] This resulted in the United Nations only receiving $1,846,391,429 of the expected $3,064,575,900 for the 2019 regular budget, which is around 60% of what was budgeted for.[xxi]

This trend has continued and at the time of the Secretary-General’s speech to the Fifth Committee in late 2022, only 132 of the 193 Member States had paid their regular budget contributions in full.[xxii] Out of those 132 Member States, only 53 paid within 30 days of receiving notice of their expected contribution.[xxiii] This again resulted in the United Nations only receiving $2,010,314,440 of the expected $3,151,895,855 for the 2022 regular budget, which is around 64% of what was budgeted for.[xxiv] After the Secretary-General spoke to the Fifth Committee in both 2019 and 2022, most Member States continued to pay their financial contributions. Nonetheless, at the end of both 2019 and 2022, 47 Member States did not pay their current year financial contribution in full.[xxv]

At a minimum, this lack of predictability in contributions received can prevent the United Nations from properly understanding its current financial needs and can prevent the delivery of certain programs due to the lack of funds when required.[xxvi] Worse, this lack of predictability can prevent posts from being filled, cause travel to be limited, meetings to be canceled, and impact many other core functions of the United Nations.[xxvii]

Despite a Member State’s loss of their General Assembly vote, if the amount in arrears equals their contributions due for the previous two years,[xxviii] there is no other deterrent to ensure that Member States make their full financial contribution to the regular budget. This means that almost all Member States that fail to pay their current year’s financial contribution to the regular budget in full by the end of the calendar year can simply contribute enough to prevent the loss of their vote in the General Assembly and escape punishment despite being responsible for creating this liquidity crisis.

Recently, many Member States have signed the “The Pledge to Predictable Payments” or have provided notice as to when they will make their financial contributions in attempts to limit the unpredictability of contributions to the regular budget.[xxix] However, these voluntary acts do not solve the underlying issue created by the Member States who choose to not pay their current year financial contribution in full. Thus, the United Nations must put in place additional deterrents to ensure that financial contributions are paid on time and in full.

One proposal to deter Member States from failing to make their full financial contributions to the regular budget would be to amend Article 19 of the Charter of the United Nations to state that if a Member State fails to make its full financial contributions for the current year by December 31^st, that Member State would lose their General Assembly vote until that contribution is made.[xxx] This change would punish Member States that fail to make their full financial contributions in the current year and would prevent Member States from owing up to two years’ worth of financial contributions to the regular budget.

A second proposal would be to add to Article 19 and state that if a Member State fails to make its full financial contributions within 30 days of receiving notice of its expected contribution to the regular budget, the outstanding financial contribution will increase by a specified percentage monthly until the financial contribution is made in full. For example, in 2023, the United States of America’s financial contribution to the regular budget is $707,897,586.[xxxi] If notice of the expected contribution is made on January 17, 2023,[xxxii] and the United States of America waits until August 20, 2023, to make their financial contributions in full and the increase is set at 3%, the United States would pay $845,266,738 instead of $707,897,586. This change would punish Member States that wait until later in the year to make their financial contributions by enforcing the requirement that contributions are due in full within 30 days of notice of expected contribution.

While the benefits of these two proposals are clear, in that they will encourage Member States to make their financial contribution to the regular budget in full and on time, it should be noted that there could be unintended consequences. First, if more Member States lose their ability to vote in the General Assembly given the lower threshold, their lack of participation could threaten the United Nations’ ability to be an effective international forum. Second, when outstanding financial contributions are increased monthly, Member States who are unable to meet their financial contribution due to a political or financial crisis may become alienated from the United Nations due to their increasing debt to the organization. While these proposals may work to solve the liquidity crisis faced by the United Nations, their consequences serve as a testament to how difficult this problem may be to solve.

Conclusion

Overall, the United Nations faces a serious threat to its ability to conduct its core functions due to the continued risk of a liquidity crisis. While many Member States provide their financial contributions when required, many others fail, which makes the United Nations’ assessment of cash on hand unpredictable. To avoid a future liquidity crisis to the regular budget, United Nations must act to ensure that financial contributions are paid on time and in full.

[i] António Guterres, Sec’y Gen., U.N., Secretary-General’s Remarks to the Fifth Committee of the General Assembly on the Proposed Programme Budget for 2020 (Oct. 8, 2019); Administrative and Budgetary Committee (Fifth Committee), U.N., https://www.un.org/en/ga/fifth/#:~:text=About%20the%20Fifth%20Committee&text=Based%20on%20the%20reports%20of,45%2F248%20B%2C%20Sect. (last visited Feb. 14, 2023).

[ii] António Guterres, Sec’y Gen., U.N., Secretary-General’s Remarks to the Fifth Committee of the General Assembly on the Proposed Programme Budget for 2020 (Oct. 8, 2019).

[iii] Id.

[iv] António Guterres, Sec’y Gen., U.N., Secretary-General’s Remarks to the Fifth Committee of the General Assembly (Oct. 12, 2022).

[v] 5 Things to Know About the UN Funding, Permanent mission of France to the United Nations in New York, https://onu.delegfrance.org/5-things-to-know-about-the-un-funding (last visited Feb. 14, 2023).

[vi]The UN Budget, Better World Campaign, https://betterworldcampaign.org/resources/briefing-book-2022/united-nations-budget#:~:text=The%20UN’s%20regular%20and%20peacekeeping,for%20special%20political%20missions%20alone. (last visited Feb. 14, 2023).

[vii]. António Guterres, Sec’y Gen., U.N., Secretary-General’s Remarks to the Fifth Committee of the General Assembly on the Proposed Programme Budget for 2020 (Oct. 8, 2019).

[viii] U.N. Charter art. 2, ¶2.

[ix] Committee on Contributions, U.N., https://www.un.org/en/ga/contributions/budget.shtml (last visited Feb. 14, 2023).

[x] Id.

[xi] U.N., Assessment of Member States’ Advances To The Working Capital Fund for 2023 and Contributions to the United Nations Regular Budget for 2023 (2023).

[xii] Committee on Contributions, U.N., https://www.un.org/en/ga/contributions/budget.shtml (last visited Feb. 14, 2023).

[xiii] U.N., Assessment of Member States’ Advances to the Working Capital Fund for 2023 and Contributions to the United Nations Regular Budget for 2023 (2023).

[xiv] U.N. Secretary-General, Financial Regulations and Rules of the United Nations, Regul. 3.4, U.N. Doc. ST/SGB/2013/4 (July 1, 2013).

[xv] U.N. Secretary-General, Financial Regulations and Rules of the United Nations, Regul. 3.5, U.N. Doc. ST/SGB/2013/4 (July 1, 2013).

[xvi] Id.

[xvii] U.N. Charter art. 19.

[xviii] Countries in Arrears in the Payment of their Financial Contributions Under the Terms of Article 19 of the UN Charter, U.N., https://www.un.org/en/ga/about/art19.shtml (last visited Feb. 14, 2023).

[xix] António Guterres, Sec’y Gen., U.N., Secretary-General’s Remarks to the Fifth Committee of the General Assembly on the Proposed Programme Budget for 2020 (Oct. 8, 2019).

[xx] Committee on Contributions: Contributions Received for 2019 for the United Nations Regular Budget, U.N., https://www.un.org/en/ga/contributions/honourroll_2019.shtml (last visited Feb. 14, 2023); About Us, U.N., https://www.un.org/en/about-us (last visited Feb. 14, 2023).

[xxi] Committee on Contributions: Contributions Received for 2019 for the United Nations Regular Budget, U.N., https://www.un.org/en/ga/contributions/honourroll_2019.shtml (last visited Feb. 14, 2023); U.N., Assessment of Member States’ Contributions to the United Nations Regular Budget for the Year 2019 (2018).

[xxii] Committee on Contributions: Contributions Received for 2022 for the United Nations Regular Budget, U.N., https://www.un.org/en/ga/contributions/honourroll_2022.shtml (last visited Feb. 14, 2023); About Us, U.N., https://www.un.org/en/about-us (last visited Feb. 14, 2023).

[xxiii] Committee on Contributions: Contributions Received for 2022 for the United Nations Regular Budget, U.N., https://www.un.org/en/ga/contributions/honourroll_2022.shtml (last visited Feb. 14, 2023).

[xxiv] Committee on Contributions: Contributions received for 2022 for the United Nations Regular Budget, U.N., https://www.un.org/en/ga/contributions/honourroll_2022.shtml (last visited Feb. 14, 2023); U.N., Assessment of Member States’ Advances to the Working Capital Fund for 2022 and Contributions to the United Nations Regular Budget for 2022 (2022).

[xxv] Committee on Contributions: Contributions Received for 2019 for the United Nations Regular Budget, U.N., https://www.un.org/en/ga/contributions/honourroll_2019.shtml (last visited Feb. 14, 2023); Committee on Contributions: Contributions Received for 2022 for the United Nations Regular Budget, U.N., https://www.un.org/en/ga/contributions/honourroll_2022.shtml (last visited Feb. 14, 2023).

[xxvi] António Guterres, Sec’y Gen., U.N., Secretary-General’s remarks to the Fifth Committee of the General Assembly (Oct. 12, 2022).

[xxvii]. António Guterres, Sec’y Gen., U.N., Secretary-General’s remarks to the Fifth Committee of the General Assembly on the Proposed Programme Budget for 2020 (Oct. 8, 2019).

[xxviii] U.N. Charter art. 19.

[xxix] António Guterres, Sec’y Gen., U.N., Secretary-General’s Remarks to the Fifth Committee of the General Assembly (Oct. 12, 2022).

[xxx] U.N. Charter art. 19.

[xxxi] U.N., Assessment of Member States’ Advances to the Working Capital Fund for 2023 and Contributions to the United Nations Regular Budget for 2023 (2023).

[xxxii] Committee on Contributions: Contributions Received for 2023 for the United Nations Regular Budget, U.N., https://www.un.org/en/ga/contributions/honourroll.shtml (last visited Feb. 14, 2023); About Us, U.N., https://www.un.org/en/about-us (last visited Feb. 14, 2023).