UN plans 20% budget cut amid liquidity crisis, internal memo says

Thousands of jobs at risk in reforms largely needed because of unpaid US debts

The UN flag flies in front of the organisation's headquarters in New York. Reuters

The UN is preparing to slash its $3.7 billion budget by 20 per cent in 2026, according to an internal memo.

The order, seen by The National, requires staff to outline reductions by June 13 and could result in thousands of job losses.

UN Controller Chandramouli Ramanathan said the cuts are part of the UN80 reform initiative launched in March to ensure the world body becomes "more cost-effective" by taking "bold and immediate steps" to improve the way it functions.

"It is an ambitious effort to ensure that the United Nations is fit for purpose to support 21st-century multilateralism, reduce human suffering and build better lives and futures for all," Mr Ramanathan said, urging staff co-operation amid "aggressive timelines".

"Downgrading of posts and positions may also be proposed to reduce the posts costs," he added.

The cutbacks will take effect on January 1, the start of the next budget cycle.

On May 13, UN Secretary General Antonio Guterres told member states at an informal meeting that the world body’s liquidity crisis stems largely from unpaid membership dues.

“The liquidity crisis is caused by one simple fact: the arrears. We have a huge debt to the organisation, essentially from one member state and a few others,” Mr Guterres said.

“We won’t solve the liquidity crisis by reforming the organisation. We solve it by countries paying their contributions in full and on time."

He added that this would improve the UN’s efficiency and mitigate the crisis.

In April, Tom Fletcher, head of UN humanitarian affairs, informed staff that due to US funding reductions, the agency would need to cut 20 per cent of its workforce to cover a $58 million budget gap.

The US owes the world body about $2.8 billion as of early 2025, according to UN figures. The total includes about $1.5 billion in unpaid assessments for the UN's regular budget and about $1.3 billion for peacekeeping operations and international tribunals.

Under the UN’s funding formula, the US is responsible for 22 per cent of the regular budget and about 27 per cent of peacekeeping costs.