You are here: 2 Finances and funding – running out of cash

The UN Secretariat budget is currently $5.4 billion for the two-year period 2018-2019. The system as a whole spends about $33 billion a year for all its offices worldwide, including a further $6.7 billion for UN Peacekeeping and the remainder via voluntary contributions to the UN’s development and humanitarian programmes. The UK contributes a total of around $3 billion to the UN – just over $500 million in mandatory assessed contributions, the rest in voluntary funding – which works out as about 66p per person per week (55p of it voluntary).

The Secretary-General recently wrote to member states warning that the UN was running out of cash. As of 30 June, core funding had a deficit of $139m, and he said the UN had “never faced such a difficult cash flow situation this early in the calendar year”. The deficit was a consequence of states paying later in the year than usual.

While the majority of this money relates to late payments by the United States, the US has frequently been late with payments over the past years due to its budgetary year. Instead it seems the crisis is caused by a large number of mid-level donor countries that have been waiting until later in the year to pay. This includes: Brazil, Saudi Arabia and Argentina.

These cash flow problems are resolvable, but a more general issue remains. Years of efficiency savings and a reduction in voluntary spending by member states, compounded by demands from the Trump administration for deep budget cuts, have left the organisation dangerously under resourced. UN Peacekeeping has been particularly hard hit and most of the UN’s responses humanitarian emergencies are underfunded.

The biggest impact has been on programmes that the Trump administration opposes for ideological and (domestic) political reasons. The UN’s work on reproductive health, for instance, has been hit by the US’s “global gag” and the UN’s Relief and Works Agency (UNRWA) has been plunged into crisis by the US’s decision to cut all funding to the organisation. The organisation provides services to around 5 million Palestinian refugees and their descendants in the Occupied Palestinian Territories and surrounding countries, and is considered to be a cornerstone of stability in the region.  Other countries have promised to help plug the gap, but so far have only provided limited additional funds – far short of the $350 million lost. The UK, for example, increased its contribution by £10 million (from £28.5 million to £38.5 million) and agreed to provide it earlier in the year than usual.

Meanwhile, as part of the Secretary-General’s reform proposals, the UN Secretariat will next year move from a two-year to a one year budget, and replace all of the overlapping five-to-seven year sequences of the UN Planning, Programming, Budgeting, Monitoring and Evaluation cycle (PPBME) with a simpler three year planning cycle.

In addition, the UN will go through its three-yearly renegotiation of scales of assessment with the US in particular looking to reduce the percentage of the UN’s budget it pays. Providing 22% of the regular budget and 28.5% of the peacekeeping budget, the US is by some distance the largest financial contributor (however, as it is the only state to have secured a ‘cap’ on its contribution, it is also the only state to contribute less than the amount assessed by the contribution formula).