"UN is facing a severe financial crisis" - UN Chief


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UN chief António Guterres today said, “the Organization is facing a severe financial crisis,” a “severe liquidity crisis,” adding that “the equation is simple: without cash, the budget cannot be properly implemented.”
In his remarks today (08 Oct) to the Fifth Committee of the General Assembly on the proposed programme budget for 2020, the UN chief warned, “this month, we will reach the deepest deficit of the decade,” adding that “we risk exhausting the closed peacekeeping cash reserves and entering November without enough cash to cover payrolls.”
Guterres explained, “in the current biennium, budget implementation is no longer being driven by programme planning but by the availability of cash at hand.”
He continued, “in 2019, managers have been instructed to adjust their hiring and non-post expenditures owing to liquidity constraints. This undermines mandate delivery and goes against our efforts to focus less on inputs and more on results.”
The Secretary-General reiterated, “our work and our reform is at risk,” saying that “as I introduce the 2020 programme budget proposals, I reiterate my call on you to recommit paying your financial obligations on time and in full.”
The Secretary-General wrote to Member States about the worst cash crisis facing the United Nations in nearly a decade. The Organization runs the risk of depleting its liquidity reserves by the end of the month and defaulting on payments to staff and vendors.
Stressing the Charter obligation of Member States, the Secretary-General thanked the Member States who have paid their regular budget assessments, which is now 129, and urged those who have not paid to do so urgently and in full. This is the only way to avoid a default that could risk disrupting operations globally. The Secretary-General further asked governments to address the underlying reasons for the crisis and agree on measures to put the United Nations on a sound financial footing.
According to the UN, by the end of September, Member States had paid only 70 percent of the total assessment for the regular budget, compared with 78 percent at the same time last year. The Secretariat had put in place multiple measures since the beginning of the year to align expenditures with cash inflows. These included adjusting hiring and other non-post expenses based on expected cash availability. Had it not contained expenditures globally from the beginning of the year, the cash shortfall in October could have reached $600 million and the Organisation would not have had the liquidity to support the opening of the General Assembly debate and the high-level meetings last month. To date, the UN has averted major disruptions to operations.
The Secretary-General has therefore requested additional steps be taken immediately, including further reductions in official travel; postponing spending on goods and services; and discontinuing events scheduled outside official meeting hours at headquarters duty stations. In addition, conferences and meetings may have to be postponed or services be adjusted.
The Secretary-General noted that this is a recurrent problem that severely hampers the Secretariat’s ability to fulfil its obligations to the people UN serves. The UN is now driven to prioritize its work on the basis of the availability of cash, thus undermining the implementation of mandates decided by inter-governmental bodies. The Secretary-General therefore looks to Member States to resolve the structural issues that underlie this annual crisis without further delay.
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