Despite Improved Financial Situation, Member States Must Act Now to Avoid Looming Liquidity Crisis, United Nations Controller Warns Fifth Committee

The United Nations Controller urged delegates in the Fifth Committee (Administrative and Budgetary) today to act to avert a looming liquidity crisis that could impact the delivery of the Organization's mandates and services next year.

As part of a periodic update on the United Nations liquidity situation, Chandramouli Ramanathan, Assistant Secretary-General for Programme Planning, Finance and Budget, said that, while the disturbing trend of increasing year-end arrears has been reversed, fluctuating payment patterns have continued in 2022. At the end of April, collections fell short of estimates by $202 million and overall collections are less than last year, creating concern and uncertainty. The Organization does not know where collections will be at the end of May. "We have no crystal ball and no one can tell us what they are predicting. It is a roller coaster ride," he said.

He outlined the impact of several proposals made by Member States to improve the Organization's financial situation, as well as a proposal by the Secretary-General. The latter would retain $200 million in credits for the Working Capital Fund, with no borrowing needed from closed peacekeeping missions in all four years: 2023, 2024, 2025 and 2026. Doing nothing to mitigate the liquidity problem will soon trigger a liquidity crisis, he warned, adding that restricting spending will impact mandate delivery and trigger the crisis again, due to the return of credits, or the unspent funds.

"No organization the size of the United Nations operates without a working capital fund," he said, urging Member States to use the $279 million in credits now to improve the financial situation. Noting that the imposition of hiring restrictions in early 2023 would impact geographic representation and affect staff morale, he stressed: "Doing nothing is not an option".

Christian Saunders, Assistant Secretary-General for the Office of Supply Chain Management in the Department of Operational Support, took the floor before the Controller to brief the Fifth Committee on the status of reimbursement of troop- and police-contributing countries. Since his last briefing in March, he said claims for troop costs and contingent-owned equipment for the October to December 2021 period for all missions, which tallied $489.8 million, have been processed, of which $484.6 million was paid in March 2022, leaving a balance of $5.2 million payable to the African Union-United Nations Hybrid Operation in Darfur (UNAMID). He said the ability to borrow cash among active peacekeeping missions, if needed, has enabled earlier disbursements that would not have been possible under previous arrangements.

Showing a PowerPoint presentation detailing reimbursements to Member States, he said reimbursements for contingent-owned equipment and personnel during the July 2021 to June 2022 period, for 11 peacekeeping missions, are estimated at $1.95 billion. Projected cash requirements for those missions during the January 2022 to June 2022 period are $1 billion. He emphasized that. if there is no payment of outstanding contributions, the Department cannot disburse to troop- and police-contributing countries what they are due.

Catherine Pollard, Under-Secretary-General for Management Strategy, Policy and Compliance, took the floor to introduce a Secretary-General report titled "Addressing racism and promoting dignity for all in the United Nations Secretariat". In 2020, the Secretary-General established a task force to oversee activities and assess staff perceptions on the extent of racism and racial discrimination in the Secretariat. The task force recommendations aim to bring about cultural change to transform the Secretariat into an accountable workplace where discrimination is actively addressed.

She said a Secretariat action plan creates an opportunity for a coordinated approach, over a 24-month period, to address discrimination. To send a strong message, she called for the establishment of an Office of Diversity, Equity and Inclusion, and providing other post and non-post resources across three budget sections.

Juliana Gaspar Ruas, Vice-Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced its related report, stressing that additional surveys, based on wider data sources and analysis, and additional consultations with United Nations system entities are necessary to comprehensively address and curtail racism and racial discrimination. Since the scope of the proposed Office of Diversity, Equity and Inclusion is beyond the context of racism and racial discrimination and the proposal does not account for existing capacities within the Secretariat that carry out related functions, she said the ACABQ believes the Office's establishment at this stage is not fully justified and recommends against it.

Pakistan's representative, speaking on behalf of the "Group of 77" developing countries and China, condemned racism in all its forms and manifestations and welcomed the Secretary-General's efforts to root out systemic racism within the Organization. The Group sees merit in the Secretary-General's proposal and looks forward to its early implementation, she said, emphasizing the urgency of addressing the issue as any delay would lead to continued discrimination during recruitment and staff promotions. Addressing racism is not only important for mandate delivery, it also sets an example for public, private, non-governmental organizations and other entities to deal with the menace, she said.

The representative of Egypt, speaking on behalf of the African Group, and aligning himself with the Group of 77, stressed the particular significance of combating racism for his Group, as Africans, past and present, know more deeply than anyone the painful and humiliating effects of that scourge on human beings and their advancement. He expressed concern about the latest study by the Working Group of Experts on People of African Descent, noting that in eight of the nine dimensions addressed, persons of African descent were the most marginalized, representing 33 per cent of respondents. Cooperation with the Working Group is crucial to effectively implement the Durban Declaration, he said, and to address discrimination in all practices and policies of the United Nations, including roster management.

In its final piece of business, the Fifth Committee adopted by consensus a draft decision on the 2022 programme budget implications of a previous draft decision regarding the Intergovernmental Conference on an international legally binding instrument under the United Nations Convention on the Law of the Sea on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction.

The Committee will meet again at 4:30 p.m. on Friday, 27 May, to conclude the second part of its resumed seventy-sixth session.

Briefing: Reimbursement of Troop- and Police-Contributing Countries

CHRISTIAN SAUNDERS, Assistant Secretary-General for the Office of Supply Chain Management in the Department of Operational Support, briefed the Fifth Committee on the status of reimbursement of troop- and police-contributing countries. He thanked contributing countries that have vaccinated their personnel before deployment in field missions. He noted the Department recently completed the quadrennial survey as a basis for the periodic review of the reimbursement rate for deployed personnel deployed in formed units. It also finalized a study of the post-traumatic stress disorders framework for uniformed personnel, with both reports taken up by the General Assembly, and is also preparing for the 2023 meeting of the Working Group on Contingent-Owned Equipment.

He noted that, in March, when he last briefed the Committee, the outstanding liabilities to troop- and police-contributing countries related to African Union-United Nations Hybrid Operation in Darfur (UNAMID) stood at $31.3 million in accounts payable. Since then, claims for troop costs and contingent-owned equipment for the October to December 2021 period for all missions amounting to $489.8 million have been processed, of which $484.6 million was paid in March 2022, leaving a balance of $5.2 million payable to UNAMID in addition to the $31.3 million in accounts payable. That brought UNAMID's account payable to $36.5 million as of today. He noted the ability to borrow cash among active peacekeeping missions, if needed, has enabled earlier disbursement that would not have been possible under previous arrangements prior to the application of General Assembly resolution A/RES/73/307.

Since the Department was established in January 2019, $7.03 billion in claims have been processed, with $6.9 billion - or 99.4 per cent - disbursed, he said. Noting the March briefing revealed UNAMID's low cash reserves had required borrowing from other active missions, he strongly encouraged Member States to make their contributions to UNAMID without further delay. Timely disbursements are even more important during the current financial situation, he stressed. The amount owed to UNAMID after the March to April period stood at $36.5 million. Showing a PowerPoint presentation detailing reimbursements to Member States, he said reimbursements for contingent owned equipment and personnel over the July 2021 to June 2022 period for 11 peacekeeping missions are estimated at $1.95 billion, and that projected cash requirements for those missions during the January 2022 to June 2022 period are $1 billion. He emphasized that, if there is no payment of outstanding contributions, the Department cannot disburse to troop- and police-contributing countries what they are due.

Management of Liquidity Situation

CHANDRAMOULI RAMANATHAN, United Nations Controller and Assistant Secretary-General for Programme Planning, Finance and Budget, updated the Fifth Committee on the management of the Organization's liquidity situation and its impact on the implementation of mandates and functioning of United Nations services.

Speaking first about peacekeeping operations, he said the quarterly aggregate cash balance of active peacekeeping missions is still trending downward, with some improvement from last year. The cash pooling for active missions is helping the Organization make more timely payments to troop- and police-contributing countries. While arrears to these countries are declining for the 1 July 2021 to 30 June 2022 period, liquidity is not yet adequate to fully settle the closing of some missions.

Turning to the regular budget, he said the disturbing trend of increasing year-end arrears has been reversed yet fluctuating payment patterns continued in 2022. This pattern increases the Organization's uncertainty around future spending. "The financial situation has improved because the Organization is collecting more money, but the liquidity situation still exists," he said. Collections at the end of April fell short of estimates by $202 million and overall collections at the end of April are less than last year, creating concern. The Organization does not know where collections will be at the end of May. "We have no crystal ball, and no one can tell us what they are predicting. It is a roller coaster ride," he added.

While restrictions on hiring work to reduce spending, this mechanism does not respond quicky enough to fluctuating liquidity situations, said Mr. Ramanathan, adding that vacancies are dropping. Spending restrictions appear inevitable at the beginning of 2023 to avert another liquidity crisis in 2024, unless Member States address the underlying problems. Despite the reduced arrears at the end of 2021, the return of $279 million of unspent prior-year funds will trigger another liquidity crisis. "The uncertainty of collections is as important as the amount of collections," he said, referring to the easing of liquidity.

He then outlined the impact of several proposals made by Member States to improve the Organization's financial situation. The proposals outlined included: Retaining $100 million of credits for the Working Capital Fund; return 2023 credits over four years; delay the return of $100 million in credits for two years; retain $100 million in credit for the Fund and return 2023 credits over four years; and retain $100 million in credits for the Fund and delay the return of another $100 million in credits for two years.

A proposal by the Secretary-General, which has been adjusted, aims to retain $200 million in credits for the Working Capital Fund, with no borrowing needed from closed peacekeeping missions in all four years: 2023, 2024, 2025 and 2026. All the variations proposed by Member States require continued access to closed peacekeeping mission cash, in varying degrees. Using the credits to increase the Fund by $200 million could release the closed peacekeeping mission cash.

Doing nothing to mitigate the liquidity problem will soon trigger a liquidity crisis, he warned, adding that restricting spending will impact mandate delivery and trigger the crisis again, due to the return of credits, or the unspent funds. The Organization does not have adequate and predictable liquidity to execute its regular budget, he said, stressing that, if all Member States do not pay in full, the arrears deplete the liquidity reserves; and if all do not pay on time, there are intra-year cash shortages. If payment patterns fluctuate, then there is uncertainty in collections, he said, explaining that a vicious cycle is created as there is not enough cash to spend, payments come in too late to spend, the budget can't be fully spent and unspent funds are returned. "No organization the size of the United Nations operates without a working capital fund," he said. He urged Member States to use the $279 million in credits now to improve the financial situation. He noted that the imposition of hiring restrictions in early 2023 would impact geographic representation and affect staff morale. "Doing nothing is not an option," he added.

Revised Estimates: Addressing Racism

CATHERINE POLLARD, Under-Secretary-General for Management Strategy, Policy and Compliance, introduced the Secretary-General's report titled "Addressing racism and promoting dignity for all in the United Nations Secretariat" (document A/76/771) for additional resources to address all forms of discrimination, including racial discrimination, in the Organization. She said that, in 2020, the Secretary-General established a task force to oversee activities and assess staff perceptions on the extent of racism and racial discrimination in the Secretariat. The task force recommendations aim to bring about cultural change that will transform the Secretariat into a workplace where discrimination is actively addressed and where there is accountability. She noted progress over the years in addressing prohibited conduct and placing the issues of equitable geographical representation and diversity at the heart of the management-reform agenda. "Any form of discrimination, including racism, exclusion and marginalization, goes against the United Nations Charter and human decency itself," she stressed. Discrimination has long-term negative consequences for staff physiological and psychological health, limits imagination and innovation, and ultimately hampers the effective delivery of mandates.

As one of the most multiculturally diverse organizations in the world, she stressed the United Nations cannot be left behind in the effort to ensure diversity, equity and inclusion in its global workforce. "In fact, we should be a leading force on this issue, and in addressing it in a sustained and deliberate manner," she said. The action plan provides an opportunity for a coordinated approach over a 24-month period that is systematic, progressive and harmonizes efforts to address discrimination - but that effort is not a one-off event. To send a strong message, she called for the establishment of an Office of Diversity, Equity and Inclusion, and for providing other post and non-post resources across three budget sections. She noted the revised estimates report proposes additional appropriations for 2022 of $2.18 million (net of staff assessment), and the establishment of 16 new posts effective 1 July 2022, as well as additional requirements for 2023 have been included in the respective sections of the proposed programme budget for 2023.

JULIANA GASPAR RUAS, Vice-Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced its related report (document A/76/7/Add.39) and said ACABQ believes additional surveys, based on wider data sources and analysis, and additional consultations with United Nations system entities are necessary to comprehensively address and curtail racism and racial discrimination. The Advisory Committee also recommends that the Assembly ask the Secretary-General to refine the strategic action plan, in cooperation with United Nations system entities, for the Assembly's consideration in the next report.

Since the scope of the proposed Office of Diversity, Equity and Inclusion is beyond the context of racism and racial discrimination and the proposal does not account for existing capacities within the Secretariat performing related functions, she said ACABQ believes the Office's establishment at this stage is not fully justified and recommends against it. ACABQ trusts the Secretariat will clarify the scope and the reporting lines and address the potential duplication of existing resources, and believes more efforts are needed to refine the proposal, including a complete overview of related matters. This would include applicable Staff Regulations and Rules; the intersection with human resources matters, such as recruitment and disciplinary cases; collaboration with United Nations system entities; overall related financial resources, both existing resources covering related functions and proposed resources; and the most appropriate funding source.

To support efforts to combat racism and racial discrimination and carry out the work of refining the proposal and strategic action plan, the Advisory Committee recommends the approval of eight general temporary assistance positions for 18 months from 1 July, she said. It also recommends a reduction of $205,100 and $125,100 to the proposed resources under contractual services, and consultants and consulting services, respectively.

ALEENA MAJEED (Pakistan), speaking on behalf of the "Group of 77" developing countries and China, condemned racism in all its forms and manifestations. The Group welcomes the Secretary-General's efforts to root out racism, including systemic racism within the Organization, and appreciates the Secretary-General's town halls and his engagement with staff and his concern to address this problem. Yet, the Group is concerned with the staff survey findings and regrets to know that Staff Regulations and Rules can be applied unfairly on the basis of race, nationality or ethnic background.

The Group has a long-standing position on equitable geographical distribution, which is enshrined in Article 101.3 of the United Nations Charter, she said. To achieve this, she stressed the need to address systemic racial discrimination within the United Nations system. The Group sees merit in the Secretary-General's proposal and looks forward to its early implementation. Yet, it also stresses the urgency to address the issue as any delay would lead to continued discrimination during recruitment and staff promotions. Addressing racism is not only important for mandate delivery, but it also sets an example for public, private, non-governmental organizations and other entities to deal with the menace, she said.

AHMED MOHAMED ISMAIL ELMAHS (Egypt), speaking on behalf of the African Group, and aligning himself with the Group of 77, said that combating racism is a matter of principle and particular significance for the African Group, as it is the African people - past and present - who know more deeply than anyone the painful and humiliating effects of that scourge on human beings and their advancement. All people are born free and equal in dignity and rights, he stressed, with equal potential to contribute to their societies and the world. He welcomed recent milestones, including the twentieth anniversary of the Durban Declaration, the announcement of the International Decade for People of African Descent, and the Permanent Forum of People of African Descent. He expressed concern over the latest study by the Working Group of Experts on People of African Descent, noting that in eight of the nine dimensions addressed, persons of African descent were the most marginalized, representing 33 per cent of respondents. It is extremely important to cooperate with the Working Group for effective implementation of the Durban Declaration, he said, and to address discrimination in all practices and policies of the United Nations, including roster management.

Programme Budget Implications related to 2022 Programme Budget

The Fifth Committee then took up a draft decision (document A/C.5/76/L.30) on the programme budget implications of draft decision A/76/L.46 titled "Intergovernmental conference on an international legally binding instrument under the United Nations Convention on the Law of the Sea on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction".

By its terms, the Committee would decide to inform the Assembly that should "L.6" be adopted, additional resources of $1 million would be required for 2022, comprising $894,700 under section 2, General Assembly and Economic and Social Council affairs and conference management; $58,100 under section 28, Global communications; $27,200 under section 29C, Office of Information and Communications Technology; and $23,000 under section 34, Safety and security, of the programme budget for 2022, together with an amount of $107,40 under section 36, Staff assessment, to be offset by an equivalent amount under income section 1, Income from staff assessment.

The Committee then adopt "L.30" without a vote.

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