By Bodo Ellmers

In late January, United Nations (UN) Secretary-General António Guterres sent a dramatic letter to UN Member States warning about the “imminent financial collapse” of the United Nations Organization. The letter followed earlier warnings that the UN Secretariat might have to reduce expenditure from the regular budget by 15 percent in 2026. This would mean reducing the workforce by about 2,600 staff. 

The situation for many of the UN funds and programmes that rely on voluntary contributions to provide live-saving assistance in conflict regions is even more dire. Funding cuts, non-payment and late payment are just some of the key budgetary challenges facing the UN. By 8 February, the due date for membership contributions to the regular UN budget, only 55 countries had paid. The ongoing funding crisis affecting the Secretariat and the UN agencies – and the millions of people who depend on their support – has reignited the debate on alternative funding instruments.   

The crisis of assessed contributions   

The UN requires all Member States to contribute to its regular budget. According to the UN Charter, “the expenses of the Organization shall be borne by the Members as apportioned by the General Assembly”. The latest scale for the assessed contributions was established by UN General Assembly Resolution (79/249) on Christmas Day 2024. The key principle for the assessed contributions is that expenses for the UN’s budget should be shared broadly according to capacity to pay. An estimate of each country’s Gross National Income (GNI) is the main indicator to measure that capacity. While this sounds like a fair and easy formula, it also means that the lion’s share of contributions to the UN is collected from only two countries. The world’s two largest economies – the USA and China –contribute 22 percent and 20 percent, respectively.

Non-payment is not an unknown quantity for the UN system. And there is very little that the UN can actually do to sanction defaulters (a key sanction would be to suspend a Member State’s voting rights at the UN General Assembly). In order to map compliance – and name and shame the Member States that don’t comply – the UN is publishing the “Honour Roll” as a regularly updated database. The mapping indicates that, in 2025, only 151 of the 193 Member States paid their regular budget assessments in full, meaning that 42 did not pay up. While most of these non-payers were small countries, the US default in particular left a big hole in the UN’s purse. The US is responsible for about 95 percent of unpaid contributions owed to the UN. 

Although the UN established a 30-day due period, only a little more than one quarter of the countries had paid their contributions by the designated date of 8 February. While these included some of the more significant payers, such as the UK and Germany, the delayed payment by heavyweights such as China and the US is a critical problem. The US Congress has approved funding and President Trump signed the bill on 3 February. However, it remains to be seen whether the money will ever be transferred or if the accumulated debts will be settled.   

The UN liquidity crisis 

The consequence of late payment is a liquidity squeeze for the UN Secretariat. It operates on an annual budget. If money comes in late, it is difficult to spend it in a meaningful way. Moreover, the UN works on the odd rule that all resources that have not been spent by the end of the year have to be returned to Members, even if the programmed budget could not be collected from the members.  To illustrate this: If the UN should have spent US$ 1 billion according to the approved budget, but has spent only US$ 900 million, it needs to return US$ 100 million to Member States. If actual revenue was only US$ 800 million because some members did not pay, the UN still needs to return money that it has never received, because it did not fully implement the approved budget. The UN’s founding fathers obviously misjudged payment discipline when they set the rules.

According to the UN Secretary-General’s letter, the UN had to return US$ 227 million to Member States from the regular budget in early 2026, money that it had never collected. An additional US$ 72 million was offset against the arrears, which reduced the debt that bad payers have to the UN. These repayments have significantly deepened the UN’s liquidity crisis. Guterres points out that, “we are trapped in a Kafkaesque cycle, expected to give back cash that does not exist”. 

As things currently stand, the UN is set to run out of cash by July this year. The Secretary-General warns that, “we cannot execute budgets with uncollected funds, nor return money we never received”. He calls on Member States to change the UN’s Financial Regulations and limit return to credits based on actual collections. 

The impact on the UN system

While at this point, it is uncertain how many contributions the UN will be able to collect, as we’ve seen above, the funding crisis might mean that the UN Secretariat has to reduce expenditure by 15 percent and cut 2,600 jobs in 2026. This is having a severe impact on the Secretariat’s ability to support the UN as the world’s central forum for international negotiations and norm-setting. The UN is the only place where all countries have a seat at the table and can collectively shape the way global rules are made, in a fully inclusive format. But the UN Secretariat’s ability to support and facilitate these processes is being affected by the cuts and the liquidity crunch. Of course, this is not an unintended consequence by those countries that cut their contributions to the UN, especially the US under the current administration. The intention is clearly to weaken the UN as an organisation.

The situation is even worse for some of the UN funds and programmes, which provide life-saving support to many people in need, especially in crisis regions. Severe cuts have affected almost all parts of the UN system – the World Food Programme, UNICEF and the Joint UN Programme on HIV/AIDS (UNAIDS) are just some of the most drastic examples. Things don’t look much better elsewhere in the UN system either. 

The World Health Organization (WHO) warned that cuts in 2025 meant that 6,700 health facilities in 22 crisis regions would have to reduce their work or shut down completely. As a result, around 53 million people were left without medical care. The WHO has issued a Health Emergency Appeal to raise urgently needed funds for its programmes. The cuts will almost certainly contribute to thousands of unnecessary and avoidable deaths in conflict regions, where millions of people are dependent on the humanitarian assistance that these UN agencies provide.

While the regular budget of the UN is very dependent on the US and China, many UN agencies rely on voluntary contributions, which often come from European countries. The European funding for the UN system is also being reduced, a consequence of the general reductions of allocations for official development assistance and humanitarian assistance in national budgets, as well as a reprioritisation of spending on the new arms race, paid for by austerity budgets in other sectors.  

Reforming the UN financing system

The rules for the UN’s regular budget were made under the assumption that everyone is paying, and everyone is paying on time. As this is actually not the case, there is an urgent need for reform. In order to address the liquidity squeeze, the Secretary-General requested that the UN should no longer have to return funds that it never received. Another measure could be that other countries could step in with voluntary contributions and cover the shortfall that non-payment by the US has caused. A special account to facilitate such actions has existed since the 1970s. Needless to say, remaining members have limited appetite to step in for the bad payers.   

More far-reaching proposals include the UN issuing bonds and raising funds on financial markets, as some Special Organizations of the UN system already do – for example, the World Bank. This would not be unprecedented; similar approaches were used in the 1960s. However, debts need to be repaid and, other than the World Bank, most UN agencies deliver support in kind or in the form of grants. As a result, market borrowing would likely provide only a temporary solution for liquidity shortfalls – for example, bridging funding gaps until major funders clear their outstanding payments, such as under a future US administration.

The financial crisis has also revived proposals for the UN system to generate revenue through global taxation. Coincidentally, this growing debate coincides with negotiations on a framework convention on tax at the UN. Innovative financing could fundamentally reshape how the UN finances global public goods, making funding more stable and sustainable in future.

Note: Many thanks to Ronny Patz (IDOS) for comments and suggestions.