a photo of the UN building in New York, via Wikimedia Commons

The UN is Running Low on Cash

The Secretary General warned yesterday that the UN’s cash flow was running low — to the point where the basic operations of the UN could be impacted.

At issue is the fact that countries have been slow to pay their UN member dues on time and in full. The UN funds itself through contributions assessed from its member states. The amount each country pays is determined by negotiations among the countries themselves and is mostly pegged to the country’s size and clout. The United States is the single largest contributor to the UN’s regular budget, paying about 22% of the budget. (A separate budget and scale of assessments pays for UN peacekeeping operations).

The problem is, countries have been unusually slow to pay their dues this year and the UN is running out of cash.  “Caused primarily by the delayed contributions of Member States to the Regular Budget, this new cash shortfall is unlike those we have experienced previously,” Antonio Guterres wrote in a letter to member states yesterday. “Our cash flow has never been this low so early in the calendar year, and the broader trend is also concerning:  we are running out of cash sooner and staying in the red longer”.

The UN says that it is still owed $810 million for 2018 and 81 countries have not yet made their annual contribution.

Part of the problem is that the budget cycle of individual member states does not always line up with that of the United Nations. This has historically been the case with the United States, which typically makes its payments to the UN at the end of the year. But even taking that into account, the UN says it has received fewer contributions at this point in the year compared to last. By the end of June, the UN says it has collected $1.49 billion, compared to $1.7 billion at the same point last year.

These payment delays can have a significant impact on the operations of the United Nations. The UN, despite its reputation is a not a gigantic bureaucracy. The UN secretariat has an annual budget of about $2.5 billion. It is a fraction of the size of, say, the US Department of Education (which has a budget of $60 billion). And with this budget, the UN funds all its day-to-day operations, excluding peacekeeping. This includes salaries of staff, utility bills, maintenance and other bills that keep its buildings in New York, Geneva and elsewhere operational.

If member states don’t pay the UN, the UN can’t pay its bills. And then if member states turn to the UN to manage some crisis or hold some emergency meeting, the UN may be hamstrung in its ability to respond.