Youth Climate Summit at the United Nations in New York, Saturday, Sept. 21, 2019. (Photo/Stuart Ramson for UN Foundation)

How a US Government Shutdown Impacts the United Nations

The US government came perilously close to shutting down. Again. But at the last minute a compromise was struck to keep the government funded for the next 45 days. Congress now has until mid-November to pass a budget or face a shutdown.

A shutdown would have sparked a major crisis at the United Nations. That’s been averted for now — but the UN is not out of the woods just yet.

Why a US Government shut down would have been terrible for the United Nations

The UN relies on dues payments from its members to fund its operations. The precise amount each country pays in membership dues is negotiated every two years between UN member states themselves, and is roughly pegged to the relative size of a country’s economy. The United States is the largest funder of the United Nations, followed by China and Japan.

Most countries make their dues payments early in the year. But because of a quirk in the US budgeting process, the United States typically does not pay its bill until sometime in the fourth quarter. This means that by Autumn, the UN is typically low on cash reserves. If other countries also fail to pay their dues earlier in the year, the UN sometimes takes out a loan to cover operating costs, like salaries. “Normally, the UN is on pencil fumes by October and needs cash,” one longtime UN observer tells me.

This year, the UN’s fiscal situation entering Q4 is even worse than normal. The United States has not yet paid the $930 million it owes. Meanwhile, other countries, including China, are unusually late in its payments. Unpaid assessments for the regular UN budget (which is separate from the UN Peacekeeping budget) are higher than it has ever been at this time of year. Under normal circumstances, the bulk of this debt would be covered in the coming weeks with the US payment. But a shutdown raises the prospect that the United States will be even later than normal — if and when it pays its dues.

If the US does not make its payment while the government is still open for the next 45 days, it will spark a major liquidity crisis at the United Nations, seriously impacting day-to-day operations at UN headquarters, in the field and beyond.

The bottom line is this: Should the US makes its payment before zero day in November, the impact of a potential shutdown on UN operations would be limited. On the other hand, if the US misses this window and there’s a shutdown, it means fiscal catastrophe for the UN.

So, watch this space — but as of now, the clock is ticking!

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