Analysis: The UN’s budget math has turned existential
The United Nations is navigating its most acute cash crunch in decades. In a letter to the 193 member states, Secretary-General António Guterres warned that the organisation faces “the very real prospect of financial collapse,” with cash potentially running out as early as July. Senior UN officials now acknowledge that shuttering the Secretariat’s Manhattan headquarters this summer is a “distinct possibility.” This is not rhetorical brinkmanship. It is the cumulative result of late and missing dues, a punishing—and peculiar—financing rule, and fast-deepening political resistance to multilateral spending led by the United States.
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Signs of strain are visible and symbolic. In New York, the UN has cut security posts, switched off escalators, turned down the heating, closed catering services and even removed paper towels from bathrooms. A sweeping reform drive dubbed UN80 is targeting a 20% reduction in the 35,000-person workforce. Staff morale, by multiple accounts, is at rock bottom; many see a panicked, slash-and-burn approach that spares senior ranks while junior and mid-level roles quietly disappear. “We’ve seen the job losses, we’ve seen the immense cuts on humanitarian development … food rations have been cut, services to refugees have been cut,” spokesman Stéphane Dujarric said.
Beyond the optics, operational capacity is shrinking. On Thursday, UN human rights chief Volker Türk said his office was in “survival mode,” appealing for $400 million (€340 million) to fill gaping holes. “These cuts and reductions untie perpetrators’ hands everywhere,” he warned, “leaving them to do whatever they please.” The contradiction is stark: crises are multiplying, yet the UN’s ability to uphold humanitarian, human rights and peace and security mandates is eroding.
The immediate drivers of the United Nations’ financial crisis are twofold. First, arrears: member states are paying late—or not at all. Second, an accounting rule forces the UN to return “unspent” funds to countries at year’s end based on the budget approved at the start of the year, not on cash actually received. The combination is, as Guterres put it, Kafkaesque.
Start with dues. The UN’s regular budget—roughly €3 billion—is funded by “assessed contributions,” a scale calculated by national income, debt and population. Peacekeeping, around €5 billion, is assessed similarly and adjusted for troop contributions. Rates range from 0.001% to 22%, with major economies carrying the heaviest load. Ireland’s share is 0.418%; least developed countries are capped at 0.01%. Most other UN activity, from the World Food Programme to UNICEF, relies on voluntary contributions.
Thirty-eight countries ended 2025 in arrears on mandatory dues, including war-scarred economies such as Afghanistan and Yemen. But the system’s hinge is the United States, historically the UN’s single largest donor—covering nearly a quarter of the regular and peacekeeping budgets and up to a third of some voluntary funding streams. Last year, Washington, already indebted, paid nothing at all. The U.S. now owes about €2 billion in assessed contributions and roughly €1.5 billion for peacekeeping. “We ended 2025 with a record $1.568 billion (€1.33 billion) in outstanding dues—more than double those of the previous year,” Guterres wrote.
The politics are explicit. “President Trump has been clear,” U.S. Ambassador to the UN Mike Waltz wrote on social media last week. “The days of blank checks to the UN are OVER,” adding that Washington is shutting down “ideological waste,” defunding a “bloated” system and putting the UN “on a DIET.” A State Department announcement accompanying a drastic cut to voluntary giving said UN contributions had “skyrocketed” to $8–$10 billion annually in recent years; this year’s pledge is $2 billion. The United States has already exited several UN bodies, including UNESCO, the UN Population Fund, the World Health Organization and the Human Rights Council.
Some member states share elements of Washington’s critique, especially on bureaucracy. Business-class travel for senior staff and benefits such as children’s school fees, once routine, are harder to justify under austerity. But many capitals balk at being penalised for following the rules. European Union members, as a bloc, collectively outspend the United States on the UN—and generally pay on time. They resist reallocation of their taxpayers’ money to cover others’ arrears. Still, there is broad agreement that the system’s plumbing needs work.
That brings us to the financing rule that makes a liquidity crisis worse. The UN must issue year-end credits to member states for “unspent” funds, calculated against the budget adopted at the start of the year on the assumption every country pays in full. In practice, that means returning money that never arrived. “Just this month as part of the 2026 assessment, we were compelled to return $227 million—funds we have not collected,” Guterres told members. Across 2027, he added, the UN will have to give back $1.3 billion in uncollected funds. The snowballing effect is stark: for the regular budget, returned cash is projected to rise from $89 million last year to more than $400 million next year; for peacekeeping, from $248 million to over $900 million.
From an institutional perspective, this is a textbook case of perverse incentives. When arrears rise, the UN cuts spending to conserve cash—then must rebate “unspent” funds as if the approved budget had been fully financed. The cycle drains liquidity precisely when it is needed most, undermines predictability and frustrates both payers and beneficiaries. Even seasoned UN watchers struggle to parse the logic; staff call it morale-sapping, donors call it opaque, and the Secretary-General calls it Kafkaesque.
The human impact lands far from New York. Field operations report trimmed rations, suspended services for refugees, throttled monitoring in conflict zones and postponed development programs. Türk’s warning that rights violators feel “untied” is not theoretical; gaps in presence and verification carry real costs for people in fragile settings. Dujarric has been blunt: unless member states change course, “there is a real prospect of this organisation running out of money.”
There are glimmers of short-term relief. President Donald Trump signed a bipartisan bill this week to secure U.S. funding for the UN in the current fiscal year. If the money flows, it will ease the most immediate cash pressure. Yet the episode has already exacted a price: operational whiplash, staff exodus, and a trust deficit with partners who depend on the UN’s continuity. It also entrenches a familiar pattern—one large donor can upend the balance, and the rules can magnify the damage.
What would a durable fix look like? At minimum, the UN’s financing mechanics must align with fiscal reality: rebates should not outpace receipts. Timetables for assessed payments need enforcement, and protection for core mandates—humanitarian, human rights, peace and security—must be prioritised ahead of discretionary spending. Those ideas are not about shielding waste; they are about preventing a liquidity spiral from gutting the very functions the UN was created to perform.
In the end, this crisis is not just about numbers; it is about credibility. If the United Nations cannot keep its lights on—literally and figuratively—amid cascading wars, displacement and rights abuses, the reputational cost will outlast any one budget cycle. Member states say “something needs to change.” The choice is whether to mend the system’s plumbing now or keep mopping the floor after the next burst pipe.
By Abdiwahab Ahmed
Axadle Times international–Monitoring.
