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Opinion

UN Faces its Worst Cash Crisis in Nearly a Decade

Stéphane Dujarric is Spokesman for the Secretary-General

UNITED NATIONS, Oct 9 2019 (IPS) - The Secretary-General wrote 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.

Stressing the Charter obligation of Member States, the Secretary-General thanked the Member States who have paid their regular budget assessments, which is now 129, and urged those who have not paid to do so urgently and in full.

This is the only way to avoid a default that could risk disrupting operations globally. The Secretary-General further asked governments to address the underlying reasons for the crisis and agree on measures to put the United Nations on a sound financial footing.

By the end of September, Member States had paid only 70% of the total assessment for the regular budget, compared with 78% at the same time last year. The Secretariat had put in place multiple measures since the beginning of the year to align expenditures with cash inflows.

These included adjusting hiring and other non-post expenses based on expected cash availability. Had it not contained expenditures globally from the beginning of the year, the cash shortfall in October could have reached $600 million and the Organisation would not have had the liquidity to support the opening of the General Assembly debate and the high-level meetings last month.

To date, we have averted major disruptions to operations.

These measures are no longer enough. The Secretariat could face a default on salaries and payments for goods and services by the end of November unless more Member States pay their budget dues in full.

The Secretary-General has therefore requested additional steps be taken immediately, including further reductions in official travel; postponing spending on goods and services; and discontinuing events scheduled outside official meeting hours at headquarters duty stations.

In addition, conferences and meetings may have to be postponed or services be adjusted. He is reviewing further options.

The Secretary-General noted that this is a recurrent problem that severely hampers the Secretariat’s ability to fulfil its obligations to the people we serve.

We are now driven to prioritize our work on the basis of the availability of cash, thus undermining the implementation of mandates decided by inter-governmental bodies.

The Secretary-General therefore looks to Member States to resolve the structural issues that underlie this annual crisis without further delay.

The Secretary-General has also kept the staff informed of these developments.

Footnote:

As of Tuesday 8 October 2019, 129 Member States have paid their regular budget dues in full. For a list of those countries, see http://www.un.org/en/ga/contributions/honourroll.shtml.

At this time, Member States have paid US$1.99 billion towards the 2019 regular budget assessment. The outstanding amount for 2019 for regular budget is US$1.386 billion.

The 64 states that have yet to pay regular budget dues in full for 2019 are: Afghanistan, Angola, Antigua and Barbuda, Argentina, Bangladesh, Belize, Benin, Brazil, Burkina Faso, Burundi, Central African Republic, Comoros, Congo, Costa Rica, Democratic People’s Republic of Korea, Democratic Republic of the Congo, Djibouti, Ecuador, Eritrea, Gambia, Grenada, Guatemala, Guinea-Bissau, Honduras, Iran (Islamic Republic of), Israel, Kiribati, Lebanon, Lesotho, Liberia, Madagascar, Mali, Mauritania, Mexico, Mozambique, Niger, Nigeria, Oman, Panama, Papua New Guinea, Peru, Philippines, Republic of Korea, Romania, Saint Kitts and Nevis, Sao Tome and Principe, Saudi Arabia, Senegal, Seychelles, Somalia, South Sudan, Sri Lanka, Sudan, Suriname, Tajikistan, Togo, Tonga, Trinidad and Tobago, Tunisia, Turkmenistan, United States of America, Uruguay, Venezuela (Bolivarian Republic of) and Yemen.

Meanwhile in a letter dated 7 October addressed to all UN staffers, Secretary-General Antonio Guterres says: I am writing to update you again on the troubling financial situation facing the United Nations. As you know, I have been working closely with Member States and managers over the past few months to solve the liquidity crisis facing our regular budget.

The ultimate responsibility for our financial health lies with Member States. Most of them have fulfilled their Charter obligations and have paid in full and some even on time. We are regularly engaging those who have not yet paid in full and will continue doing so.

With your help, we have been containing expenditures globally from the beginning of this year to align it with our liquidity. Without these measures, we would not have been able to meet payrolls and fulfil our obligations towards vendors this month.

To date, Member States have paid only 70 per cent of the total amount needed for our regular budget operations in 2019. This translates into a cash shortage of $230 million at the end of September. We run the risk of depleting our backup liquidity reserves by the end of the month.

I want to assure you that we are in this together. I have made every effort to protect staff from this crisis and I will continue to do so. I wrote to Member States on 4 October 2019 to explain that we are at a critical juncture for regular budget operations and that I must now take additional stop-gap measures to ensure the salaries and entitlements of staff will be paid as usual.

The Department of Management Strategy, Policy and Compliance will meet with senior managers tomorrow to explain these measures.

I have asked the Department of Management Strategy, Policy and Compliance to continue to work with the various departments and offices to further contain non-post expenditure wherever possible.

Managers will be asked to explore avenues to further limit expenses during the last quarter, including postponing conferences and meetings or seeking ways to reduce related expenses by adjusting services.

I am also directing them to limit all official travel to the most essential activities and to further reduce all other non-post expenses. This includes postponing purchases of goods and services, implementing energy saving and other measures to reduce utility bills and temporarily curtailing expenses on managing facilities.

Everything is being done with the major objective: To protect staff from the impact of our liquidity problems. I ask you to engage with your managers if you have any concerns. Please also share with them your ideas for curtailing expenditures in your areas of work. Together, we will manage in these difficult times.

I will continue to work with Member States to solve this problem to enable the United Nations to carry out its vital work.

Thank you for your cooperation and your service during these challenging times.

 
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