UN - United Nations

10/16/2020 | Press release | Distributed by Public on 10/16/2020 17:27

Concerned that United Nations Cash Flow Problems Are Hampering Programme Delivery, Delegates in Fifth Committee Criticize Non-Payment of Dues by One Member State

United States Representative Rejects Claims Her Country Is Responsible for Deepening Liquidity Crisis as 'Patently False'

The representative of the United States today rejected as 'patently false and downright insulting' suggestions that her country is responsible for the United Nations liquidity crisis, while other speakers urged those Member States with the capacity to do so to pay their assessments in full and on time, as the Fifth Committee (Administrative and Budgetary) took up the question of improving the Organization's financial situation.

Their statements came four days after António Guterres, Secretary‑General of the United Nations, presented the Committee with a proposed programme budget of $2.99 billion for 2021, a net reduction of 2.8 per cent over 2020, as the Organization sustains its operations in the face of its ongoing cash crunch and the COVID‑19 pandemic. (See Press Release GA/AB/4357.)

Today's discussion also took place a week after Catherine Pollard, Under‑Secretary‑General for Management Strategy, Policy and Compliance, laid out the details of the Organization's deepening liquidity crisis in an informal meeting. At the start of today's meeting, Ms. Pollard updated the Committee on developments since her 8 October briefing, saying that the total number of Member States that have paid their regular budget assessments now stands at 128, and 39 have fully paid in all categories.

Guyana's representative, speaking on behalf of the 'Group of 77' developing countries and China, said that a permanent Security Council member currently owes two‑thirds of all outstanding assessments to the United Nations, despite having the capacity to pay and benefiting from a fundamental distortion in the determination of how the Organization is financed. 'It is unacceptable that this Member State clings on to its special privileges, while slowly bankrupting the Organization and the multilateral system,' she said.

Also noting that as of 30 September 2020, $357 million was owed to Member States for troops and formed police units, compared to $6 million last year, she said it is unfair for developing countries with relatively more challenging financial situations to continue subsidizing peacekeeping operations - a point echoed by Singapore's representative, speaking for the Association of Southeast Asian Nations (ASEAN).

Voicing the concern of several speakers, the representative of the European Union regretted that United Nations programme managers are forced to operate in a context of income unpredictability, where budgetary decisions are influenced more by cash availability than strategic direction. She supported measures that would allow the Secretary‑General to manage both the Organization's budgets and cash more strategically, while maintaining the highest standards of transparency and accountability.

China's representative, echoing the sentiments of the Group of 77 and ASEAN, said that despite the Organization's dire financial situation - and with full capacity to pay - one Member State is withholding its assessed contributions 'and leverages them to serve its political agenda'. This is the major cause of the liquidity crisis, he asserted.

Cuba's delegate said that the United States should be ashamed of keeping the Organization under 'perpetual financial blackmail'. Everyone knows that it pays less than it should, given its capacity to pay, she said, adding that United States companies make 'juicy profits' from the business they do with the Organization.

The United States' representative responded that ever since the United Nations was founded in 1945, her country has been its largest contributor. Already this year, it has paid $2.3 billion in assessed contributions - $1 billon more than the second‑largest contributor and more than the total contributions of 186 Member States combined. 'For certain countries to suggest we are not meeting our obligations, or that we are contributing the United Nations financial crisis, is patently false and downright insulting,' she said, warning Member States not to be fooled by the rhetoric of some delegations wishing to distort the facts.

Japan's representative, expressing concern that the Organization's programme budget has expanded over the years, said that Member States' resources - ultimately drawn from their taxpayers - are not unlimited. Resource requirements should be set at realistic levels, while the Secretariat must keep striving to use the approved budget in the efficient, effective and accountable manner, he said.

The representatives of the United Kingdom, Malaysia and Morocco also spoke.

The Fifth Committee will reconvene at a date and time to be announced.

Improving the Financial Situation of the United Nations

Speaking at the start of the meeting, Catherine Pollard, Under‑Secretary‑General for Management Strategy, Policy and Compliance, updated the Committee on developments since her briefing on 8 October, saying that the total number of Member States that have paid their regular budget assessments now stands at 128. For peacekeeping operations and tribunals, the totals are 42 and 109 respectively. Thirty‑nine Member States are now fully paid up in all categories. She added that regular budget payments were received from Ecuador and the United States, reducing the total for unpaid contributions to $1.4 billion.

[At the Committee's 8 October informal session, Ms. Pollard laid out the details of the Organization's deepening liquidity crisis, which the Secretary‑General had outlined in a 31 August letter to Member States after giving a briefing in May.

The financial indicators highlighted in Ms. Pollard's 8 October statement are included in the Secretary General's report (document A/75/387) which reviews the United Nations financial situation relating to the regular budget, peacekeeping operations and international tribunals, based on four indicators: assessments issued, unpaid assessments, available cash resources and the Organization's outstanding payments. The report provides a review of the situation as of 30 September 2020.

During the 8 October briefing, Ms. Pollard explained that in the last two years, the deepest deficits in the Organization had occurred in October 2018 and November 2019, yet this year's expenditure controls mean the deepest deficit will most likely occur in December. Even with the sustained restricted levels of spending, the Organization will likely end the year with a deficit which cannot be fully covered by regular budget liquidity reserves. This year, the Organization also will potentially exhaust all regular budget liquidity reserves, despite numerous measures taken to reduce expenditures to align them with available liquidity. 'While these measures may have averted a cash crisis and a disruption of operations, the tight expenditure controls are hampering, and will continue to hamper, budget implementation and mandate delivery,' she said, adding that several activities and outputs are being either postponed or cancelled. This will be reflected in the performance reports.

Chart 2 of the presentation summarizes the status of regular budget assessments as of 30 September 2019 and 2020, she said. In 2020, assessments were issued at a level of $2.87 billion, $18 million more than the 2019 level. Payments received by 30 September 2020 totalled $2.08 billion, $91 million more than around the same time in 2019. Yet part of this sum relates to the delayed payments of 2019 contributions only received this year. At the end of September, collections were $185 million less than anticipated at this time. As seen in Chart 3, 124 Member States had fully paid their regular budget assessments by 30 September 2020, compared to 127 Member States a year earlier.

Chart 5 shows the 69 Member States who have yet to fully pay their regular budget assessments - owing $1.49 billion - as of 30 September 2020, three more States than last year, she said. Since the 30 September cut‑off date, Seychelles has paid in full. Chart 6 provides a comparative view of the largest outstanding assessments for the regular budget as of 30 September 2019 and 2020; the United States was responsible for the largest portion of unpaid regular budget assessments, owing $1.09 billion as of 30 September 2020, compared with $1.06 billion in 30 September 2019. Over the same period, Brazil followed by owing $119 million versus $143 million; the Russian Federation, owing $66 million, compared with zero; and Argentina, owing $59 million, up from $52 million.

Shifting to peacekeeping operations, Ms. Pollard said Chart 7 details the status of peacekeeping assessments and collections during 2020, which totalled $5.2 billion, with $4.4 billion being assessed in July for the fiscal year 2020/21 for mandated periods. As of 30 September 2020, collections improved to $5.8 billion and the total amount outstanding was $2.8 billion, compared to $3.8 billion one year ago.

As shown in Chart 8, as of 30 September 2020, 38 Member States had paid all peacekeeping assessments in full; 10 more than the same date a year ago. Since the cut‑off date, Denmark, New Zealand and Spain had paid their assessments in full. Chart 9 gives an overview of the outstanding tallies for specific peacekeeping missions. The $2.8 billion outstanding as of 30 September 2020 is comprised of $2.3 billion owed for active missions and $425 million for closed missions. Chart 10 shows the unpaid peacekeeping assessments as of 30 September 2020 by Member States, compared to 30 September 2019; the United States was responsible for the largest portion of unpaid assessments, owing $1.38 billion as of 30 September 2020, down from $2.37 billion on 30 September 2019, followed by Brazil, Italy and the Republic of Korea.

Ms. Pollard said Chart 14 shows that as of 30 September 2020, $357 million was owed to Member States for troops and formed police units versus $6 million as of 10 October 2019. For contingent‑owned equipment claims, $495 million was owed for active missions, compared to $64 million as of 10 October 2019 and $86 million for closed missions. Payments for troops and formed police unit costs are current for all missions up to 30 June 2020, except the African Union‑United Nations Hybrid Operation in Darfur (UNAMID), which was paid up to 31 December 2019. Contingent‑owned equipment for active missions are settled to 31 March 2020, except for UNAMID, which was paid up to 31 December 2019. With recent payments by Member States, the Organization expects to make ad‑hoc payments for contingent‑owned equipment of about $192 million for arrears, except for UNAMID.

Chart 15 shows the breakdown of the overall amount owed for troop and formed police units and for contingent‑owned equipment to Member States as of 30 September 2020. Ms. Pollard said the Secretary‑General is committed to meeting obligations to the Member States providing troops and equipment as expeditiously as possible, as the cash situation permits. The Secretariat continuously monitors the peacekeeping cash flow situation and maximizes the quarterly payments based on the available cash and data. The Secretariat depends on the expeditious finalizing of MOUs with contingent‑owned equipment contributors to do so, she added.

Turning to the International Tribunals, Ms. Pollard said Chart 16 lays out the financial details of the international tribunals. As of 30 September 2020, the total contributions outstanding for the tribunals tallied $58 million. This includes amounts outstanding for the International Criminal Tribunal for Rwanda, which was last assessed in 2016; for the International Criminal Tribunal for the Former Yugoslavia, which was last assessed in 2018; and the Mechanism for International Criminal Tribunals, assessed in 2019.

Lastly, she said Chart 22 lists the 38 Member States that had paid all their assessment in full as of 8 October 2020.]

As the floor was opened to delegates, the representative of Guyana, speaking on behalf of the 'Group of 77' developing countries and China, emphasized that the full, effective delivery of mandates remains crucial against the backdrop of the COVID‑19 pandemic, expressing concern about the regular budget's ongoing liquidity issue. While the cash position has improved slightly due to a hiring freeze, lower spending amid COVID‑19 and other austerity measures, the Group notes with deep concern that several activities have been postponed or cancelled. 'Budget management must be driven by programme delivery and not based on liquidity,' she said. Noting the possible need to borrow from the accounts of closed peacekeeping missions by year's end to cover regular budget cash shortfalls, she said such a measure is neither a good budgetary practice, nor is sustainable, adding: 'It is merely a short‑term solution that breeds complacency over the existence of an artificial liquidity buffer.'

Pointing out that as of 30 September 2020, $357 million was owed to Member States for troops and formed police units, compared to $6 million last year, she said it is unfair for developing countries with relatively more challenging financial situations to continue subsidizing peacekeeping operations. A permanent Security Council member currently owes two‑thirds of all outstanding assessments to the United Nations, despite having the capacity to pay and benefiting from a fundamental distortion in the determination of how the Organization is financed. 'It is unacceptable that this Member State clings on to its special privileges, while slowly bankrupting the Organization and the multilateral system,' she said. Moreover, action is needed to facilitate Member States' payment of assessed contributions and they should not be prevented from honouring their legal and financial obligations to the Organization.

The representative of Singapore, speaking on behalf of the Association of Southeast Asian Nations (ASEAN), said that the world is simultaneously facing an epochal health crisis and the biggest economic calamity and job losses since the Great Depression, all of which threaten humanity and realization of the Sustainable Development Goals. The United Nations is now more relevant than ever, he said, calling on all Member States to empower the Secretary‑General to implement the Organization's collective mandate and deliver concrete results by strengthening its financial situation. Despite lower expenditures due to COVID‑19, the Organization continues to face liquidity challenges. It is untenable for Member States to allow the Organization to delay reimbursements to troop- and police‑contributing countries, many of whom are developing countries facing extreme economic hardships, he said, calling on all Members States to pay their assessed contributions in full, on time and without conditions. 'This is a time for action,' he said, urging them to renew their commitments to multilateralism.

The representative of the European Union said that once again the United Nations is facing severe liquidity issues, further straining the capacity of the Organization to fulfil its mandates. Programme managers are forced to operate in a context of income unpredictability where their decisions are influenced more by the availability of cash rather than strategic direction, severely hampering the Organization's ability to fulfil its mandates. The Secretary‑General has already sounded the alarm several times, he said, reiterating the Union's support for measures that would allow the Secretary‑General to manage both the Organization's budgets cash more strategically, while maintaining the highest standards of transparency and accountability.

Expressing regret that the Fifth Committee could not reach consensus on the proposals made last year, he said that it must keep exploring any possible realistic measures that could help handle this very detrimental situation. He also called upon the Committee to keep under close review the functioning of all reserve and complementary mechanisms such as the Working Capital Fund, to ensure that they are 'fit‑for‑purpose' in the current context. He commended the 38 countries that have paid their full contributions, one third of which are from the European Union, thus providing the Organization with the financial support and income predictability necessary to carry out its mandates. Sustainable financing, performance and accountability are integral to effective peacekeeping. Timely payments of uniformed personnel have improved. The bloc regrets that the closed peacekeeping operations cannot yet be liquidated because of the need to maintain their available cash as a buffer for the regular budget, he said.

Cuba's representative said that the United States should be ashamed of keeping the Organization under 'perpetual financial blackmail'. Everyone knows that the United States pays less than it should, given its capacity to pay, she said, adding that year after year, United States companies make 'juicy profits' from the business they do with the Organization, to the tune of $1.737 billion in 2019 alone.

The representative of China, associating himself with the Group of 77 and China, said that one Member State owes the regular budget $1.09 billion and the peacekeeping budget $2.757 billion. Yet despite the Organization's dire financial situation - and with full capacity to pay - that country still withholds its assessed contributions 'and leverages them to serve its political agenda'. This is the major cause of the liquidity crisis, he asserted. He added that despite the tremendous economic and fiscal pressure resulting from the COVID‑19 pandemic, China, as the United Nations' second‑largest financial contributor and a responsible developing country, has paid $1.32 billion to the Organization this year.

The representative of Japan emphasized that Member States' resources - ultimately drawn from their taxpayers - are not unlimited. Expressing concern that the Organization's programme budget has expanded over the years, he said that when resource requirements are elaborated, they should be set at realistic levels. He went on to request the Secretariat to keep striving to use the approved budget in the efficient, effective and accountable manner.

The representative of the United Kingdom said that the United Nations cannot be expected to keep operating effectively with cash shortages. 'It is not sustainable,' he said, encouraging Member States and the Secretary‑General to identify new and innovative ways to help alleviate regular budget liquidity challenges ‑ including the idea of granting the Secretary‑General greater flexibility in managing the regular budget.

The representative of the United States said that it hardly bears repeating that since the founding of the United Nations, her country remains its largest contributor. Already this year, it has contributed $2.3 billion in assessed contributions, which is $1 billion more than the next largest contributor and more than the total contributions of 186 Member States combined. She added that the United States is also the largest contributor of voluntary funds to the United Nations system, providing approximately $7 billion in voluntary contributions every year. 'For certain countries to suggest we are not meeting our obligations, or that we are contributing the United Nations financial crisis, is patently false and downright insulting,' she said. She recalled that due to the timing of its fiscal year, which is different from that of the Organization, the United States will pay the remainder of its 2020 regular budget assessment by year's end. 'Our payment cycle has been consistent since the 1980s and we have consistently supported this Organization,' she said, warning Member States not to be fooled by the rhetoric of some delegations wishing to distort the facts.

Turning to the Under‑Secretary‑General's presentation on 8 October, she commended the Organization for its improved financial management. As the Under‑Secretary‑General noted, the amount and timing of cash contributions has been relatively consistent over the last three years. However, due to better financial management, the United Nations utilized only the Working Capital Fund for liquidity purposes in September, without needing to tap into the special account or the closed peacekeeping operations account, as it did in 2018 and 2019. Going forward, the Organization must continue to apply sound finance management practices, independent of its liquidity situation, she said.

Representatives of Malaysia and Morocco also spoke.