Analysis | UN on the Brink: Guterres Warns of a ‘Race to Bankruptcy’ as Member States Withhold Funds
- Ahmed Fathi
- Oct 23
- 4 min read
By Ahmed Fathi
UNHQ, New York: The United Nations is running out of money — and excuses. In an unusually blunt address to the Fifth Committee, Secretary-General António Guterres warned that the Organization could face what he called “a race to bankruptcy” unless Member States pay their dues on time and the General Assembly agrees to suspend outdated fiscal rules that are bleeding the UN dry. His proposed 2026 budget cuts deeper than any in recent memory, slashing $577 million and nearly 2,700 posts in an attempt to stave off insolvency.
The Budget: Leaner, Smaller, and Still at Risk
Guterres’ initial proposal for 2026 totals $3.715 billion, already slightly below the 2025 figure. It includes funding for 37 special political missions and 14,275 staff posts, maintaining a balance among the UN’s three pillars — peace and security, development, and human rights.
Yet even that modest plan proved unsustainable. His revised estimates reduce the figure to $3.238 billion (a 15 per cent cut) and downsize staffing to 11,594 posts — an 18.8 per cent drop. These reductions target large administrative departments, streamline overlapping functions, and shift back-office operations to lower-cost duty stations such as Bangkok.
Essential programs — particularly those serving least developed, landlocked, and small island developing states — are shielded from cuts. The proposal also protects the Peacebuilding Fund ($50 million) and Resident Coordinator system ($53 million) while expanding the UN Human Rights Office’s regional presence in Addis Ababa, Bangkok, Beirut, Dakar, Panama City, Pretoria, and Vienna.
Liquidity Freefall: Arrears, Credits, and a Broken Rulebook
The Secretary-General laid bare the numbers. The UN began 2025 with a $135 million cash deficit and $760 million in unpaid contributions, most unlikely to be recovered. Despite austerity measures cutting $600 million from this year’s spending, the Organization could still end 2025 with a deficit exceeding $450 million.
Compounding the crisis is a perverse financial regulation: any unspent funds must be returned to Member States as credits against future dues, even when those funds remain unused because the money arrived too late. The UN owes $300 million in credits at the start of 2026 — effectively erasing 10 per cent of the new budget before a single dollar is spent.
“If this continues,” Guterres warned, “we will again spend less than the budget in 2026 because we did not collect enough. That will probably lead to a collapse of the regular functioning of our Organization.” Without reform, the UN may have to refund $600 million — about one-fifth of its 2027 budget — even as it verges on insolvency.
Member States Clash: Efficiency or Erosion?
The debate that followed exposed familiar geopolitical divides.
The Group of 77 and China cautioned that “efficiency gains” must not erode programs benefiting developing countries or reduce their staffing representation.
China and the African Group demanded that the development pillar be protected, and reforms not deepen geographic inequities.
The European Union, the UN’s largest collective donor, supported fiscal discipline but rejected liquidity fixes that would penalize punctual payers.
ASEAN, through Singapore, condemned “deliberate withholding of contributions by certain Member States” that undermine multilateralism — a thinly veiled reference to Washington.
Cuba was less diplomatic: “We cannot be held hostage by the will of the United States,” its delegate declared.
Russia urged stricter enforcement of anti-duplication measures and full disclosure of posts affected by cuts.
Saudi Arabia called for fairer staffing at the International Court of Justice and sustained support for UNRWA.
Israel urged the Committee to keep politics out of budget talks.
Amid the finger-pointing, one truth held: without collective responsibility, there will be no collective solvency.
Advisory Voices: Reform without Ruin
The Advisory Committee on Administrative and Budgetary Questions (ACABQ) described the revised estimates as a “pragmatic response to evolving fiscal realities” and urged closer oversight of senior posts and documentation workloads. The Committee for Programme and Coordination reaffirmed eight strategic priorities for 2026–2028 — from peace and sustainable development to human rights and disarmament — ensuring the UN’s mission statement remains intact even as its budget shrinks.
The Larger Crisis: Political Will, Not Just Cash
Behind the balance sheets lies a crisis of commitment. Member States continue to expand the UN’s mandates — through new conventions, pacts, and resolutions — while failing to fund them adequately. The Organization now performs global crisis management on a shoestring, bound by fiscal rules that reward delay and punish efficiency.
Guterres’ UN80 Initiative seeks to modernize the Secretariat — introducing digital transformation, data analytics, and behavioral-science tools — but modernization alone cannot fix a liquidity trap built on political hesitation.
As the Secretary-General warned, unless arrears shrink and credit returns are suspended, “drastic cash conservation measures will again be inevitable next year.” In blunt terms, the United Nations may soon be forced to choose between paying its staff and fulfilling its mandates.
Conclusion: A Test of Multilateral Survival
Eighty years after its founding, the United Nations faces not just a budget shortfall but a legitimacy test. The question is no longer whether it can reform — but whether its Members will allow it to survive. If political paralysis continues, the world’s pre-eminent multilateral body may soon discover that the cost of inaction is bankruptcy — both fiscal and moral.