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Updated On: Tuesday, 18 June 2019

Speakers Focus on Deepening Liquidity Problems, Late Payments to Peacekeeping Troop Contributors, as Budget Committee Discusses United Nations Financial Situation

Drawing attention to deepening liquidity problems and continued delays in reimbursing countries that provide peacekeeping troops and police, delegates in the Fifth Committee (Administrative and Budgetary) today urged all Member States in arrears, especially those with ample capacity to pay, to promptly fulfil their financial obligations to ensure that the United Nations continues to deliver its mandate.

“The sovereign equality of nations is a concept that also includes the equal responsibility to pay all assessments in full, on time and without conditions,” said Singapore’s delegate, who spoke on behalf of the Association of Southeast Asian Nations (ASEAN).  While some countries face genuine difficulties in paying their dues, most major contributors have no lack of capacity to do so, he said.

An observer for the State of Palestine, speaking for the “Group of 77” developing countries and China, expressed the Group’s serious concern about the Organization’s financial health, particularly its deepening liquidity problems in the regular budget.  Increasing regular budget deficits and borrowing from the accounts of closed peacekeeping missions are neither good budgetary practice nor sustainable.  Nor is it acceptable that $339 million is still owed to troop- and police-contributing countries, creating a situation whereby developing countries are in fact “subsidizing” peacekeeping operations mandated by some Security Council delegations that have the capacity to pay, but chose to withhold payments.  “We firmly believe that any deliberate and unilateral withholding of contributions by Member States that do have the capacity to pay is unacceptable,” he said.

Canada’s delegate, speaking also for Australia and New Zealand, said that the Organization’s deteriorating cash situation means its managers are diverting their attention from optimal mandate delivery to cash management.  Field managers are having to delay procurement related to the safety and security of personnel and late reimbursements to troop- and police-contributing countries are impeding troop rotations and the willingness of States to continue to provide personnel.

India’s delegate called for a serious review of the issue of delayed reimbursements to troop and police contributors.  “Reimbursement on time for peacekeeping is a genuine expectation,” he said, adding that unjustifiable and inexplicable delays in paying monies owed have hindered the United Nations ability to maintain honest agreements with troop-contributing countries in other areas of peacekeeping.

China’s delegate pointed out that the main problem facing the Organization’s finances is insufficient cash flow due primarily to the failure of some Member States to pay in full and on time.  Without liquidity, the United Nations will become “a river without sources and a tree without roots”, he said, emphasizing that the Organization must pay more attention to the comprehensive management of its budget performance and ensure that every penny from the taxpayers of Member States is well spent.

As of today, 44 Member States have paid their dues in full and on time in all categories – the regular, peacekeeping and tribunal budgets, said Jan Beagle, Under-Secretary-General for Management Strategy, Policy and Compliance, as she gave an update on payments made since her last briefing on 7 May, in which she elaborated on the financial situation of the Organization according to four main indicators.  They include the amounts of assessed contributions; unpaid assessed contributions; available cash; and outstanding payments to Member States.

Also speaking today were representatives of Cuba, Japan, Russian Federation and the European Union.

The Fifth Committee will meet again at 10 a.m. on Tuesday, 21 May, to discuss the administrative and budgetary aspects of financing peacekeeping operations, including issues related to closed missions.

Improving Financial Situation of United Nations

JAN BEAGLE, Under‑Secretary‑General for Management, updated the Fifth Committee on the financial situation since she had given the Committee an overview of its four main financial indicators:  the amounts of assessed contributions, unpaid assessed contributions, available cash, and outstanding payments to Member States, on 7 May.

Ms. Beagle said that Barbados, Chile, Republic of Moldova, San Marino and Vanuatu are now among the 96 Member States that have paid their regular budget dues in full.  For peacekeeping operations, Cuba, Ireland, Malawi and Rwanda have paid in full all due assessments, bringing the total number of such Member States to 51.  For the international tribunals, Burundi, Malawi, Rwanda, Thailand, United Kingdom and Vanuatu are now among the 73 Member States that have paid in full.  In addition, Cuba, Ireland, Malawi and Rwanda are now fully paid for all categories, bringing the total number of such Member States to 44.

SAED KATKHUDA, observer for the State of Palestine, speaking on behalf of the “Group of 77” developing countries and China, expressed the Group’s serious concern at the Organization’s financial health, particularly the deepening liquidity problems in the regular budget and the late settlement of payments to troop- and police-contributing countries for peacekeeping operations.  Increasing regular budget deficits and borrowing from the accounts of closed peacekeeping missions are neither good budgetary practice nor sustainable.  He emphasized that it is unacceptable that $339 million is still owed to troop- and police-contributing countries, creating a situation whereby developing countries are in fact subsidizing peacekeeping operations mandated by some Security Council delegations that have the capacity to pay, but chose to withhold payments.

It is encouraging that, compared to last year, more Member States have paid their assessments in full, he continued.  However, the outstanding contributions in terms of percentages hit a decade-high record in 2018 at 21.3 per cent.  The Group empathizes with those Member States that cannot meet their financial obligations for reasons beyond their control, but “we firmly believe that any deliberate and unilateral withholding of contributions by Member States that do have the capacity to pay is unacceptable”.  That is particularly so for those Member States that have exhibited repeated patterns of withholding while holding on to their special privileges, he added.  It is all the more unacceptable that troop- and police-contributing countries are in effect subsidizing these same countries which are the “penholders” of peacekeeping mandates, demand improvements according to arbitrary and selective definitions of performance, yet fail to pay their assessments in full, on time and without preconditions.  He said the Group will carefully study the Secretary-General’s budget reform proposals, but no matter how well thought out they might be, their underlying precondition for successful implementation is that Member States pay their assessments.  “No amount of flexibility will solve a basic lack of financial resources,” he said.

TSU TANG TERRENCE TEO (Singapore), speaking on behalf of the Association of Southeast Asian Nations (ASEAN), expressed serious concern about the financial uncertainty experienced by the United Nations in recent years, reiterating that assessed contributions are Charter obligations, which each Member State is legally bound to honour.  While being encouraged by the upward trend in recent years of more Member States paying their assessments in full and on time, the bloc is concerned that the Organization continues to face serious liquidity challenges.  Deficits have also become larger and occur earlier in the year.  “The reason for our cashflow challenges is abundantly clear,” he said.  While some countries face genuine difficulties in paying their dues, most major contributors have no lack of capacity to pay.  “The United Nations would be on firmer footing if the major contributors lived up to their basic responsibilities,” he said.  “The sovereign equality of nations is a concept that also includes the equal responsibility to pay all assessments in full, on time and without conditions.”

The share of the United Nations budget borne by ASEAN member States has increased in recent years, but they remain committed to paying their assessments, he said.  ASEAN will carefully study the Secretary-General’s proposals to improve the Organization’s financial situation.  Any such measures should focus on creating a sustainable solution and addressing root causes and should not result in more additional unfair burdens and negative consequences for Member States.

KENT VACHON (Canada), speaking also on behalf of Australia and New Zealand, expressed deep concern about the flow-on effects of unpaid assessed contributions.  The Organization’s deteriorating cash situation means its managers are diverting their attention from optimal mandate delivery to cash management.  That in turn puts a drag on efficiency and effectiveness, imposed by some Member States with a cost paid by all, as well as by the United Nations beneficiaries.  “Most worrying are indications that field managers are having to delay procurement related to the safety and security of personnel,” he stated, adding that late reimbursements to troop- and police-contributing countries are having an impact on troop rotations and the willingness of States to continue to provide personnel.

That the Organization is facing cash shortages earlier and earlier in the year highlights the difficulties created by both a wider swath of late-paying Member States, as well as the usual debtors, he said.  He commended the one fifth of the United Nations membership that have paid their budget obligations in full and urged all those with outstanding assessed contributions to pay immediately.  As the General Assembly addresses the liquidity crisis, Canada, Australia and New Zealand will keep focusing on ensuring that all funds entrusted to the United Nations are spent well, transparently and with full accountability, he said.

JAN DE PRETER, European Union delegation, said that promoting sound financial management at the United Nations is a priority for the bloc’s member States.  While the amount of payments received by the regular budget cut-off date has increased this year, the level of unpaid assessed contributions is also higher than a year ago.  That direction of travel is the wrong one, he said, urging Member States with pending assessments to address this as a priority and reiterating the importance of all Member States paying their assessments in full, in good time and without conditions.  Turning to peacekeeping operations, he said the amount of outstanding payments, although lower than a year ago, remains high at $2.1 billion.  The decrease in the amount of total cash available for peacekeeping is concerning as well.  The Organization’s financial health and the success of peacekeeping missions depends on timely payment of assessments.  Emphasizing that the member States of the European Union together contribute almost 30 per cent of the regular and peacekeeping budgets, he said an equitable sharing of financial responsibilities according to their capacity to pay is a prerequisite for sustainable financing for the United Nations system.  For its part, the Organization must live within agreed budget levels, he said, adding that the European Union is confident that management reform will help lead to enhanced accountability.

ANJANI KUMAR (India), associating himself with the Group of 77 and ASEAN, said that his country’s share of the United Nations budget has been increasing in recent years, including a 13 per cent jump this year.  India has paid all assessments in full and on time.  Arears of “a whopping sum of $3.6 billion,” are approximately one third of the annual assessment of the Organization.  Apart from the $1 billion worth of unsettled reimbursements to the troop-contributing countries, large reimbursements related to Letters of Assist ($178 million) and death and disability claims ($8 million) are also outstanding.  While India is owed significant sums for troop and contingent-owned equipment, it continues to support peacekeeping and remains the largest troop contributor.  “Reimbursement on time for peacekeeping is a genuine expectation,” he said, adding that unjustifiable and inexplicable delays in reimbursement have also negatively impacted the United Nations ability to maintain honest agreements with troop-contributing countries in other aspects of peacekeeping.  “This situation calls for a serious introspection,” he emphasized, adding that the current reimbursement framework and related Secretariat practices are compounding the problem and cannot continue unaddressed.

YAIMA DE ARMAS BONCHANG (Cuba), associating herself with the Group of 77, said it is the United States – “the nation with the greatest resources and wealth on the planet” – which owes the most to the United Nations.  It insists on saying it is the biggest contributor, yet it owes more than $2.1 billion, or 60 per cent of the total debts of Member States, of which 53 per cent represents arrears.  The more than $1 billion that the United States owes to the budgets of active and inactive peacekeeping operations prevents the full implementation of mandates agreed by the Security Council, keeps the Organization in great debt to troop-contributing countries and prohibits the return of surplus balances from closed missions.  It is no secret that the withholding of payments by the United States is a form of financial blackmail that has nothing to do with its capacity to pay, she said.  It is also offensive and outrageous that the United States talks about getting better returns on its investment in the United Nations.  That demonstrates that it views international peace and security, development and human rights as a business, she said, adding that United States companies are making “great profits” through the business they do with the Organization.  She noted that the United States could meet its debts to the United Nations by consigning just 0.2 per cent of its approved budget for military spending.  She went on to state that Cuba strives to fulfil all its financial obligations to the Organization despite the economic, commercial and financial blockade imposed on it by the United States for 57 years.

WATARU OTSUKA (Japan), emphasizing the responsibility of Member States to pay their assessments in full and on time, said his country has been fulfilling its obligations faithfully despite its long-standing domestic financial difficulties.  It will continue to do so, he said, cautioning, however, that the resources of Member States are not unlimited.  When the Organization’s requirements are elaborated and discussed, it is important to set realistic levels for resources that are necessary and sufficient for the delivery of mandates.

FU LIHENG (China), associating himself with the Group of 77, said that as the second-largest financial contributor to the United Nations, China – as a responsible developing country – always pays its assessed contributions in full, even as the total amount has increased substantially.  The main problem facing the Organization’s finances is insufficient cash flow due primarily to the failure of some Member States to pay in full and on time.  If those States cannot fulfil their financial obligations, the United Nations will become “a river without sources and a tree without roots”.  Even the best reform measures will not resolve the problem, he said, calling on those countries with the capacity to do so to expeditiously pay their dues.  Recalling that outstanding reimbursements to troop- and police-contributing countries stood at $1 billion as of 30 April, he said it is “extremely unfair” that much of that amount is owed to developing countries, exacerbating their financial burden.  He went on to state that the Organization must pay more attention to the comprehensive management of its budget performance and ensure that every penny from the taxpayers of Member States is well spent.

DMITRY S. ALYAKIN (Russian Federation) expressed his delegation’s disappointment that the Secretariat had promised it would brief Member States on the situation concerning late payments, but once again failed to provide information on measures to reduce those payments.  Underscoring that late payments negatively impact the functioning of the United Nations, he noted that there is no financial crisis in the Organization at present as the number of countries that fully paid their dues has increased.  “The financial situation is sound,” he said.  The Russian Federation is a conscientious financial contributor and one of the first countries to pay its regular budget assessments in full and on time.  The Russian Federation also pays peacekeeping assessments when it receives notices from the Secretariat.  Its position on this matter remains unchanged – Member States should pay their assessments in full, on time and without conditions.

Ms. BEAGLE noted that several Member States touched on the Secretary-General’s proposals to improve the financial situation of the Organization.  The Secretariat looks forward to discussing the proposals and is ready to provide information required by Member States.

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