UN scraps rule forcing it to repay unspent funds

• The United Nations has overhauled a decades-old rule that requires it to return unspent funds to Member States, even when those funds had never been deposited in the first place.

• The decision taken by the General Assembly follows recommendations from its Fifth Committee, which is responsible for administrative and budgetary matters.

• In addition to this historic decision, the General Assembly approved a $5.1 billion annual peacekeeping budget for 2026-2027, down 10 per cent from the previous period.    

Record level of arrears

• The financial rules, established 80 years ago, required the UN to give back any unspent funds to Member States as credits against future assessments.

• This applied even when underspending results from late contributions or from funds that were never received.  

• Annalena Baerbock, the General Assembly President, raised the issue in an address to the European Parliament in February.

• By its vote, the General Assembly has agreed to introduce, for a four-year trial period, a new methodology to ensure that unspent funds are returned to Member States only when they are backed by cash

• The decision comes at a time when the UN continues to face a severe liquidity crunch as governments delay paying their mandatory financial contributions, forcing cuts across the system affecting everything from hiring to peacekeeping operations and humanitarian assistance.

• The UN ended 2025 with a record high of $1.6 billion in unpaid assessments, according to the Secretary-General’s latest report on the Organisation’s financial status, issued in May.

• Overall arrears across the regular budget, peacekeeping and two international tribunals exceed $6.5 billion. 

• At the beginning of this year, the UN implemented strict cash conservation measures to both reduce and slow expenditures.

What is the purpose of UN’s Fifth Committee?

• The Fifth Committee is the General Assembly’s main Administrative and Budgetary Committee, where all financial and programme matters concerning the UN system are discussed.

• Every year, it considers and approves the organisation’s budget.

Main committees of General Assembly are: 

• First Committee (Disarmament & International Security)

• Second Committee (Economic & Financial)

• Third Committee (Social, Humanitarian & Cultural)

• Fourth Committee (Special Political & Decolonisation)

• Fifth Committee (Administrative & Budgetary)

• Sixth Committee (Legal).

Where does the UN get its money from?

• The UN gets its money basically from all the countries. There are 193 Member States. 

• The UN regular budget funds the core administrative costs of the organisation, including the UN General Assembly, Security Council, Secretariat, International Court of Justice, special political missions, and human rights entities. 

• The regular budget is adopted by the Assembly and covers one calendar year (January 1 to December 31). 

• In addition, the UN maintains a distinct budget for peacekeeping operations, with the fiscal cycle July 1 to June 30.

• Most Assembly decisions related to the budget are adopted by consensus. 

• When budget votes occur (which is rare) decisions are made by a two-thirds majority of members present and voting, with each country having one vote. 

• The General Assembly determines a regular budget scale of assessments every three years based on a country’s capacity to pay. 

• The amount paid by Member States is based on a complex formula that includes the size of each country’s economy. Other elements include the country’s external debt, income per capita, and level of development. 

• The amounts range from a high of 22 per cent of the budget to 0.001 per cent, paid by the least developed countries.

What happens if a country doesn’t pay its UN dues?

If the amount that a country owes is equal to what they were assessed to pay for the previous two years, they lose their vote in the UN General Assembly. They don’t get that vote back unless the General Assembly makes a special decision, or they pay enough to get below the two-year threshold, so they try to avoid owing that much.