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Financial crisis: UN cuts spending, freezes hiring, scales back services

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The UN says it has been forced to cut expenses, stop hiring, and limit some services. On Monday, member states urged one another to fulfill their financial obligations, cautioning that the intensifying monetary turmoil jeopardizes the organization’s capacity to perform essential functions. The Fifth Committee of the General Assembly convened to deliberate on the financial stability of the multilateral entity. With a mounting deficit in contributions, member states are currently in arrears by $2.4 billion in regular budget payments and $2.7 billion in peacekeeping funds.

Officials warned that failing to fulfill these financial commitments could undermine the UN’s credibility and its ability to carry out the mandates given by its member states. Speaking on behalf of Liechtenstein, a representative from Switzerland noted, ‘Each delay in payment, every hiring freeze, and every cancellation of services erodes trust in our ability to perform.’ A suggested approach is to permit the UN to keep unspent funds at the end of the fiscal year, rather than returning them to member states as credits. This current requirement, which persists even when funds are received late, hampers the UN’s ability to utilize these resources effectively.

This proposed adjustment could act as a protective measure to ensure operations continue smoothly, particularly in January when payment delays are common. Delegates also supported the restricted use of “special commitments which are emergency funding tools at the beginning of the year to cover late contributions’ generated shortfalls. Although these measures may offer some temporary relief, many speakers, including representatives from Kazakhstan, Norway, and the United Kingdom, stressed that the underlying issue remains the ongoing late or non-payment of dues Norway highlighted that such short-term solutions will not solve the fundamental problem and called on member states to support substantial financial reforms. The European Union pointed out that the crisis is not just a theoretical concern, emphasizing that there are real operational risks, and the burden should not fall solely on those countries that meet their financial obligations on time.

Singapore, representing the Southeast Asian bloc of nations known as ASEAN, expressed its deep-seated concerns regarding the UN’s ongoing liquidity issues, which have regrettably become a norm. It highlighted the necessity for the UN Economic and Social Commission for Asia and the Pacific (ESCAP) to temporarily close its offices for a duration of three months, alongside halting travel and recruitment activities.

Delegates expressed concern upon learning that an unnamed country, widely recognised as the United States, is responsible for more than half of all unpaid dues. Reports indicate that under President Donald Trump’s administration, the U.S. has withheld financial support to the UN for political reasons.

Russia has called for greater transparency in the financial management practices of the UN, cautioning against unilateral actions taken without the participation of member states. Catherine Pollard, the UN’s chief management official, noted that since May 9, only 106 nations have fully paid their normal budget commitments for the year; only a small handful of nations have fulfilled their financial obligations across several budget categories.. As of May 19, UN records showed that only 61 countries had completely fulfilled their financial responsibilities to the organization. The collective message from member states on Monday was clear: without broad and timely financial support, the UN’s ability to effectively serve the global community, especially in times of crisis, is at serious risk.

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