Amid warnings that UN funding may run out by mid-summer, a member state finance committee has the option to change an outdated rule that has made the organisation’s budget crisis a lot worse.
As alarmist as it was, a press release from the United Nations General Assembly finance committee – saying the UN would face imminent financial collapse by August if membership dues are not paid — barely triggered a perceptible global reaction. It was as if the world had gotten used to the UN’s existential crisis.
Earlier this month, Catherine Pollard, under secretary general for management strategy, policy and compliance, pressed the Fifth Committee, as it’s called, to urge member states to pay on time and in full, or change rules that have allowed the crisis to snowball out of control.
“The current cash balance (at the UN) is only sufficient to meet legal obligations through mid-August,” she said, explaining that “cash conservation measures will remain in effect” until there is certainty that contributions may meet financial needs until the end of the year.
It was not the first time the committee had been given such a warning, but with little time to spare, the announcement should raise deafening alarms. “The situation is as dire as the UN secretary general already announced at the start of this year,” says Ronny Patz, a UN finance analyst and researcher with the German Institute of Development and Sustainability. “Every month that the United States doesn’t pay, it’s only getting worse, and every month that the new financial rules are not in place, the risk of bankruptcy gets higher.”
On top of a massive drop in UN funding due to the Trump administration’s withholding of mandatory fees, a rule requiring cash paybacks to members when budgeted funds are not spent due to late payments has had catastrophic effects, contracting funding to the UN every year quite a bit more.
Crisis math
Pollard detailed how the UN’s secretariat had started the year with no cash reserves, after being hit with a $400 million liquidity deficit due to unpaid contributions and having to dip into its Working Capital Fund and Special Account to cover bills. Fifty-five of the UN’s 194 member states paid in full within the required 30-day period after the organisation’s $3.45bn budget was announced, allowing its numbers to return to the black and to reimburse the funds.
But by the end of April, despite the number of countries that paid their dues in full rising to 106, outstanding payments stood at $2.8bn due to arrears, sharply up from last year. At the top of the list of late and non-payers this year are the US, with roughly $2bn due, including $827m in arrears for 2025, followed by China, which owes $429m to the organisation.
But many other states have failed to pay as well. By the end of December, only 151 member states paid their contributions in full, with a few making token payments to maintain voting rights.
Read more: Behind the UN liquidity crunch, a multilateral system in crisis?
Peacekeeping operations, conducted through a separate budget, also face mounting budget shortfalls, as fewer and fewer states pay their dues on time or at all, forcing deep cuts in troops deployed globally, including in South Sudan and the Democratic Republic of Congo. The Trump administration, which says it opposes endless peacekeeping missions in favour of finding political solutions to conflicts, has sharply cut back on its contributions, adding to Washington’s mounting arrears to the operations, estimated at over $2.2bn.
Recent US diplomatic notes seen by Devex indicate that Washington is calling for specific “quick win” reforms at the global body in exchange for a resumption of payments to the UN. These include reforming the pension fund system, cutting more senior-level posts and ending business-class travel for some professionals. It also demanded a 10 per cent reduction in peacekeeping missions.
Rule at fault
Very much at fault for the current state of UN finances, at least for its regular budget, according to Patz, is the so-called payback rule. Formulated in 1945, it effectively reduces the UN’s funding every time member states fail to pay on time. “The rule is the first line of drop, and then whatever the US doesn’t pay comes on top of that every year”, he said.
The rule requires the UN to reimburse member states within two years for unspent funds from the regular budget due to non- or late payment of dues by certain members. With 2025 recording the lowest level of assessed contributions in seven years as a proportion of the annual budget, the 2027 budget is expected to be particularly low due to a hefty $400m refund.
The provision, part of the organisation’s financial Rules and Regulations, was initially agreed to ensure that funds are reimbursed if the organisation has spent less than expected.
But calls to reform the outdated rule have been growing. Instead, unspent funds could be put towards staving off the UN’s budget crisis – with spending already cut by 15 per cent in 2026 and staff slashed by 19 per cent.
An earlier proposal, adopted by consensus by the General Assembly in 1972, would allow voluntary contributions from member states to cover funding shortfalls.
Last October, secretary general António Guterres told member states they had the choice to “overhaul our financial rules, or accept the very real prospect of financial collapse”.
At the Fifth Committee meeting earlier this month, Norway’s delegate said the credit returns cannot be maintained, as they “force the organisation into a financial death spiral.” Mexico’s representative, also favourable to suspending the rule, said that returning unspent funds may create a “perverse incentive, which can foster arrears and even non-payment.”
Meanwhile, Uruguay, which spoke on behalf of the G77 developing countries and China, stressed that countries needed to pay in full, on time, and without conditions, noting that the current crisis was due to “the significant arrears of the single largest contributor,” i.e., the US.
Ongoing talks
Questions about reforming the rule will continue to be discussed over the coming weeks, as the finance committee meets to discuss the peacekeeping budget, which has a bit more flexibility than the UN Secretariat, allowing them to offset refunds against unpaid contributions.
“The question is whether they will change the rules before the summer break …, or if they drag this into the fall regular budget discussions,” around the time of the UN General Assembly session, Patz explains, noting that under the current discussions, the committee may also choose to align the peacekeeping budget with the same rules as that for funding to the UN secretariat.
China and the US did not respond to Geneva Solutions’ request for comment regarding their contributions.
“This is really about the future,” Patz adds. “It’s about deciding that the situation shouldn’t get worse. Member states are just playing games at the moment, because, obviously, with every day, it’s harder for the UN to plan this year and next year.”
