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UN’s Cash Crisis May Force Hiring Freeze, Limit Official Travel & Curtail Expenses System-Wide

Credit: United Nations

UNITED NATIONS, Feb 16 2024 (IPS) - The United Nations is heading towards a severe cash crisis forcing the world body “to implement aggressive cash conservation measures to avert a default in meeting the legal obligations of the Organization”.

Secretary-General Antonio Guterres has drawn attention to “the unfortunate deteriorating financial situation of our regular budget operations”.

UN Deputy Spokesperson Farhan Haq told IPS that in order to ensure liquidity for paying staff salaries, certain difficult steps will be necessary. Hiring restrictions will need to be maintained during 2024, he said.

Restrictions in non-post spending will also be critical to bridge the liquidity gap. As a result, until the situation improves, official travel will need to be limited to the most essential activities, he said.

“Purchases of goods and services will be postponed, unless absolutely critical. Hiring of consultants and experts will be minimized to the extent feasible”.

And most construction and maintenance projects will be suspended, except where the slowing down of major construction projects would result in significant future additional expenses.

“We will implement energy-saving and other measures to reduce utility bills and curtail expenses on managing facilities. Non-essential security expenses will also be curtailed, as long as they do not impact the safety of our premises, assets and of our personnel and delegates,” said Haq.

The crisis is blamed on most member states who have either delayed or absconded on their annual dues – called assessed contributions— to the world body.

UN spokesperson Stephane Dujarric told reporters, as of February 15, only 58 out of 193 Member States have paid in full.

The main cause of the liquidity crisis: not all Member States pay their assessments in full. In 2023, the UN collected 82.3 per cent of the year’s assessment, the lowest in the last five years. Only 142 Member States paid their dues in full – again, the lowest in the last five years. As a result, year-end arrears climbed to $859 million, up from $330 million in 2022.

A secondary cause of the liquidity crisis relates to a shift in the payment patterns of Member States, including the unpredictability of both the timing and the amounts of anticipated collections. In 2023, collections trailed estimates throughout most of the year. The UN ended the year $529 million short of anticipated collections.

The cash crunch is also having a negative impact on Geneva, home to several UN agencies.

According to the UN, Geneva houses around 40 international organizations, 180 permanent missions and more than 400 NGOs. In addition to the UN entities headquartered there, most UN funds, programmes and agencies maintain regional offices or liaison offices there.

Ian Richards, an economist at the Geneva-based UN Conference on Trade and Development (UNCTAD) and former President of the Coordinating Committee of International Staff Unions and Associations, told IPS the UN had to close its Geneva campus for three weeks over Christmas and “we are told that further closures are likely”.

“Meanwhile some translation staff have been told they can’t take any leave at all until August, which we believe is more a symptom of poor management. Of great concern is that staff, mainly young, with temporary contracts, are being let go,” said Richards.

In his letter to staffers, Guterres said: “We expect the regular budget liquidity situation to be far more challenging in 2024, as we are starting with very little cash. In order to avoid a payment default throughout the year, while dealing with the unpredictability of intra-year collections, our initial estimates are that we will need to conserve around $350 million in cash by slowing down and reducing spending until we have certainty that we have enough cash to meet our obligations each month.”

This means, “ we will have to introduce spending restrictions right away or risk running out of cash by August, including the liquidity reserves and the surplus cash of closed tribunals.”

“Protecting staff from the liquidity crisis to the maximum extent is a priority for me. I have repeatedly made every effort to do so over the years and I will not relent in doing everything possible to mitigate any pressure on you”.

However, the reality is that personnel costs account for more than 70 per cent of the regular budget. In order to ensure liquidity for paying staff salaries, certain difficult steps will be necessary. Hiring restrictions will need to be maintained during 2024.

“I am keenly aware that this will have a knock-on effect. High vacancies put an added burden on staff – especially those who work in entities with high vacancy rates. This step is essential if we are to have any hope of ensuring sufficient cash inflows,” declared Guterres.

Meanwhile, in a joint statement released early this week, Louis Charbonneau, United Nations Director, Human Rights Watch (HRW) and Widad Franco, UN Advocacy Officer, HRW, warned that a cash crunch and hiring freeze at the United Nations threaten to hinder UN human rights investigations in places like Sudan, Ukraine, and Syria.

https://www.hrw.org/news/2024/02/13/uns-financial-troubles-jeopardize-critical-human-rights-work

Delegations from China, Russia, Cuba, and others have been trying for years to defund UN human rights work in the General Assembly’s Fifth Committee, which oversees the budget.

Their attempts in December to block funding for investigations into grave human rights abuses in Sudan, Syria, Ukraine, Russia, Nicaragua and elsewhere failed.

The UN leadership and member countries, HRW said, should ensure that the UN’s human rights teams have funding and staff to fulfill their mandates. And governments that haven’t paid their assessed contributions should pay up.

Guterres has also written to Member States to inform them of the situation and to alert them that the UN will be forced to implement aggressive cash conservation measures to avert a default in meeting the legal obligations of the Organization.

He also reminded them that the ultimate responsibility for our financial health rests with Member States, and he encouraged them to pay in full and on time.

“I have asked relevant senior managers to engage with Member States and outline the potential impact on our ability deliver on our mandates, including support to intergovernmental meetings across duty stations. The Department of Management Strategy, Policy and Compliance will work with senior managers to help deal with the impact of these measures. We will monitor the cash flows carefully and adapt to the evolving liquidity situation”.

“Member States have been very supportive of my proposals regarding the budget for 2024 and have made positive decisions on initiatives, such as establishing two new offices for Anti-Racism and for Data Protection, increasing funding for core activities of UNRWA, increasing resources for development and human rights activities and strengthening the Peacebuilding Fund with assessed contributions from 2025”.

However, budgets approved without adequate cash to execute them undermine the essence of the process, declared Guterres.

IPS UN Bureau Report

 


  
 
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