The UN is set to gain greater financial flexibility after member states approved a four-year trial of new budget rules designed to prevent the cash shortages that have repeatedly threatened its ability to operate.
The change, adopted by the General Assembly, means the UN will only return unspent assessed contributions to member states when those funds have been received in cash, ending a decades-old practice that officials said worsened liquidity problems.
UN Secretary General Antonio Guterres welcomed the decision on Wednesday, saying the previous system had forced the organisation into an unsustainable position because governments often failed to pay their mandatory contributions in full or on time.
"For far too long, the UN budget process has faced a fundamental contradiction," Mr Guterres told reporters in New York. "We were often required to return funds that we had not spent because we had not actually received them."
He said the organisation had effectively been expected to refund money that never arrived, describing the situation as a "Kafkaesque cycle".
The reform, which he said he had advocated for nearly a decade, would allow the UN to manage resources more responsibly and protect operations, particularly peacekeeping missions.
UN Controller Chandramouli Ramanathan said the 75-year-old financial rule had pushed the organisation "into a financial abyss."
Mr Ramanathan compared the organisation's finances to "a leaking boat" or "a large heavy aircraft running on fumes".
Despite the rule change, he warned that the world body remains heavily dependent on overdue payments from its two largest contributors, the US and China.
Mr Ramanathan said current cash reserves for the regular budget were expected to last only until the end of August. China still owes about $428 million for this year's regular budget assessment, while the US has paid only about $160 million of $2 billion, he said.
He expects both countries to make further payments before September. If either delays payment, the organisation could face another liquidity crisis as early as September, Mr Ramanathan said.
The UN has collected only about 56 per cent of this year's regular budget assessments, while staff salaries account for about 70 per cent of spending.
With reserves largely depleted by years of unpaid contributions and no ability to borrow commercially, the organisation has little financial cushion, he said.
Mr Ramanathan said the UN had already eliminated more than 3,000 posts, equal to about 21 per cent of its workforce, as part of cost-cutting measures.
The UN's proposed regular budget for 2026 is $3.4 billion, down about seven per cent from the previous year. The budget is financed through mandatory contributions from its 193 member states, with assessments based largely on countries' economic size.
Mr Guterres had warned in January that continued payment delays by major contributors, including the US, could push the organisation towards a broader financial crisis.
