UN aims to fix budget rule cutting cash availability amid crisis

By Emma Farge

GENEVA, Dec 18 (Reuters) - ⁠U.N. officials are ⁠hoping to ‍overhaul a "bizarre" rule that could see the global body credit hundreds of millions of dollars in unspent dues to states next year, even as it ‍faces fears of bankruptcy.

Under U.N. financial regulations, any money unspent, often because ​states paid too late or not at all, is automatically subtracted from their future dues.

This means the global ​body would have to credit members nearly $300 million next year, U.N. officials say, reducing by close to 10% the planned budget of $3.2 billion.

Tatiana Valovaya, director general of the U.N. in Geneva, called the rule "bizarre", ​saying reforms have been sought for years but so far have not succeeded.

"The organisation has to return to the member states the money which it hasn't received, and ​that could make our situation for the year 2026 even more difficult," she told reporters this week.

The U.N. is already ‌facing a 15% budget reduction as it seeks to cut costs in its 80th year amid a cash crisis, driven largely by arrears ​from top contributor the United States.

A decision is set ⁠to be made on reforming the rule as part of ongoing talks on the 2026 budget, with the General Assembly set to make ‌a decision before year-end, a U.N. spokesperson told Reuters.

U.N. fees are based on the size of each of its 193 members' economies. Observers say the rule made sense when countries paid their dues punctually ‌and in full but as of December 15 only 148 had done so, a U.N. website showed.

Many fear ‌U.S. President Donald Trump will not pay the U.S.' outstanding fees after criticising the body.

Secretary-General Antonio Guterres is seeking to temporarily suspend the return of credits as part of the budget package, a U.N. document ‍showed. In October, he estimated the amount to be credited to states will rise to $600 million in 2027 based on unspent funds ⁠from 2025.

"That means a race to bankruptcy," he said.

U.N. finances expert Ronny Patz called it a "runaway crisis". "We are getting to a point where core functions cannot be performed and that impacts everything that depends on the Secretariat," he said.

(Reporting by Emma Farge; Additional reporting by Michelle Nichols in New York; Editing by Sharon Singleton)

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