Global Policy Forum

UN likely to Run Out of Funds Early


By Betsy Pisik

Washington Times
May 25, 2006

The United Nations, long accustomed to late paying of dues by its richest members, is on a pace to run out of funds months earlier than usual this year. The organization has regularly dipped into peacekeeping reserves to pay its operating budget for a month or two late in the year, while waiting for the United States to transmit the money it usually pays when its own fiscal year begins in October.

But this year, a $950 million spending cap largely imposed by the Bush administration will have the organization run out of money as early as July, according to U.N. officials familiar with the organization's budget. Washington imposed the spending cap during budget negotiations in December, to make sure that obsolete mandates and poor management systems were not funded for a full year. But little progress has been made in the drive to streamline the organization, meaning the United States may not wish to see the cap lifted or extended.

When the organization has run through its money in the past, it has borrowed money from the peacekeeping accounts to keep the lights on and programs running. During a fiscal presentation yesterday, U.N. Controller Warren Sach tabulated $327 million in the accounts of closed peacekeeping missions, the usual source of the loan. But Mr. Sach said that after nations are reimbursed for troop and equipment contributions, just $73 million will be left in the accounts. "This leaves only $73 million freely available for possible cross-borrowing for other accounts, including the regular budget, the international tribunals and active peacekeeping operations," he said. He noted that the peacekeeping division had already had to borrow against that $73 million for missions in Western Sahara and Georgia, and might need cash for Kosovo.

Roughly $1.2 billion is owed in contributions to the U.N. regular budget, according to the U.N. controller's office, with $675 million of that due from the United States. Japan and Germany, which owe $283 million and $74 million respectively, must also pay their assessments as quickly as possible, according to yesterday's report. The U.N. operating budget for this year is $1.76 billion, a figure that does not include peacekeeping expenses, international tribunals or the renovation of the U.N. headquarters building. An additional $333 million is still unpaid from 2005.

"The picture ... of last year is generally quite positive, but not uniformly so and we have a long way to go before I can report to you a clean bill of fiscal health," Mr. Sach told a sparsely attended meeting on financial affairs yesterday. Washington pays nearly 22 percent of the regular budget -- roughly $400 million a year -- but for nearly two decades has transferred most of that money in early winter, at the start of its own fiscal year. U.S. officials were present for Mr. Sach's presentation yesterday, but had no comment afterward, saying they had just seen the findings.

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