UN institutes austerity measure as cashflow crisis worsens

The iconic fountains in front of the UN headquarters will be stilled symbolically on Monday as the cash-strapped organisation adopts stricter austerity measures to stave off a crisis.

With 65 countries owing the regular UN budget their assessments totalling $1.386 billion, the UN has to take the drastic measures to continue operating, Chandramouli Ramanathan, the Controller and Assistant Secretary-General, told reporters on Friday.

He emphasised that the UN was not facing a budget problem, but a cashflow crisis that has come to a head this month because some members have not paid their dues nine months after they were due.

India paid up its $23.25 million dues for the regular budget on January 30 itself, one of the few countries to pay up on time.

The main defaulter is the US, which is also the UN's biggest contributor.

It owes $1.05 billion, of which about $676 million is for this year and the rest are arrears from last year, Ramanathan said.

Under Secretary-General Catherine Pollard said the UN has contacted the US Mission about the crisis and it was in touch with Congress about it.

The US budget year starts in October and usually it sends the UN dues in November.

The austerity measures coming into force on Monday include limited interpretation and translation services, cutbacks in building's cooling and heating, provision of water at meetings, and shutdown of some escalators, according to a letter from Secretary-General Antonio Guterres to department heads that was seen by .

What will hit some diplomats hardest in bringing home the message of austerity is the shutting down of the often alcohol-lubricated receptions in the delegate's lounge after 5 p.m.

Pollard said that there will be no furloughs of staff and with the austerity measures the UN hopes to be able to pay salaries and maintain payments to vendors under contracts.

Ramanathan said the austerity measures are only temporary and will last as long as there is a cashflow problem.

This week the deficit was $386 million and the UN had already exhausted its sources of borrowing within the organisation like the peace-keeping operations and the working capital fund, he said.

The UN is not permitted to borrow from outside sources like a corporation facing temporary cashflow problem might, he added.

He said that the UN had anticipated the recurring shortfalls that happen in the third quarter of every year and tried to adjust expenditures through the year, but the payments were later in coming in this year and the arrears larger - a noticeable trend over recent years.

(Arul Louis can be contacted at arul.l@.in and followed on Twitter @arulouis)

( With inputs from IANS )