UN Bankruptcy Looms, Funding Set to Run Out in Weeks
Despite repeated warnings that the U.N. was underfunded, the international peacekeeping body may be facing a U.N. bankruptcy in a matter of weeks.
The United Nations is facing a severe budget deficit of $230 million due to delayed payments from member countries. The organization’s Secretary-General Antonio Guterres warned on Monday that the world body would run out of money by the end of October 2019.
“Member states have paid only 70% of the total amount needed for our regular budget operations in 2019,” Guterres wrote in a letter on October 7 to the U.N.’s 37,000 employees and obtained by AFP news. “This translates into a cash shortage of USD $230 million at the end of September. We run the risk of depleting our backup liquidity reserves by the end of the month.”
The U.N. will have to postpone some of its scheduled conferences and meetings and reduce some service programs to survive the budget crisis, Guterres added. The budget problem has also forced the secretary-general to restrict official travels to only essential activities.
UN Bankruptcy Was Forewarned
According to an unidentified U.N. official, Guterres has asked member countries to up their contributions since early 2019, but they refused to do so. Guterres stressed that the U.N. financial health responsibility lay in its members. The U.N. operational budget for the 2018-2019 period is approaching $5.4 billion.
The financial woes of the U.N. do not come as a surprise. Last year, Guterres sent a warning letter to the U.N’s 193 member countries to pay their dues on time, adding that the institution “never faced such a difficult cash flow situation this early in the calendar year.”
“An organization such as ours should not have to suffer repeated brushes with bankruptcy. But surely, the greater pain is felt by those we serve when we cannot, for want of modest funds, answer their call for help,” Guterres said in a letter to the member states.
UN Funding Explained
U.N. funding is split into two categories: mandatory (or assessed dues) and voluntary funds. All of the U.N.’s 193 members must pay a percentage of both the U.N. operating and peacekeeping budget. The organization uses a complicated formula to determine a percentage paid by each member.
The U.S is so far the largest donor to the U.N. (which President Donald Trump opposes as “unfair”). In 2016 Washington contributed $10 billion of the U.N.’s $50 billion budget making the U.S.’ contribution larger than the sum of funds provided by the next three nations combined (Britain, Japan and Germany), Brookings data showed. In 2018 the U.S. paid 22% the U.N.’s general budget and 28% of the U.N.’s peacekeeping budget.
Members also can make voluntary payments. Some U.N. organizations such as the World Food Program and the United Nations Children’s Funds rely on voluntary contributions. Non-governmental organizations can contribute voluntarily. The Bill & Melinda Gates Foundation, owned by tech mogul Bill Gates, is the second-largest donor to the World Health Organization (WHO).
Under U.N. rules, a country with a debt equal or exceeding its payment for the previous two years will lose its voting rights in the United Nations General Assembly, unless it proves that its inability to pay is beyond its control.
Libya, as an example, has lost its voting rights, but despite being in arrears, Somalia, Guinea Bissau, Comoros and Sao Tome and Principe still retain their voting rights.
US Cuts UN Funding
Ahead of the last year’s U.N. General Assembly, U.S. President Trump announced the U.S. would slash all financial support for the U.N. Relief and Works Agency, the U.N. body that supports Palestinian refugees, calling the agency “irreedeemably flawed.” Trump had also previously cut U.S. funding to other U.N. bodies such as UNESCO and the U.N. Population Fund.
The White House also previously proposed funding cuts to UNICEF, a U.N. body providing support for vulnerable children worldwide, as UN Dispatch reported last March.
In early January signs of a U.N. bankruptcy came as United Nations chief Antonio Guterres warned that U.N. member states owed $2 billion in U.N. peacekeeping funds, with the U.S. responsible for one-third of the missing funds.
Cutting funds to the U.N. and various international bodies has been a trend under the Trump administration which has repeatedly sought to withdraw itself from international commitments and pursue a more isolationist foreign policy.
Trump’s first proposed budget as U.S. president called for slashing $1 billion in U.N. peacekeeping funds prompting warnings that such a drastic funding loss would severely impact the U.N.’s programs and mission.
“The figures presented would simply make it impossible for the U.N. to continue all of its essential work advancing peace, development, human rights and humanitarian assistance,” Stephane Dujarric, spokesman for Secretary-General Antonio Guterres, said in response to Trump’s 2017 funding cut proposal.
Now, two years later, a U.N. bankruptcy looms as the agency may be out of money before the end of October.