UN Faces ‘Race to Bankruptcy’ as Guterres Cuts 2026 Budget Sharply

The Secretariat building with flags of Member States in the foreground, at UN Headquarters, in New York.

The United Nations is heading towards what Secretary-General António Guterres described as a “race to bankruptcy” unless Member States pay their dues in full and on time. He issued the warning on Friday while presenting a sharply reduced regular budget of $3.238 billion for 2026.

The revised proposal represents a significant decrease from the original $3.715 billion request and stands 15.1 per cent below the approved appropriation for 2025.

Speaking before the Fifth Committee of the General Assembly — which oversees UN finances and administrative matters — Mr. Guterres painted a bleak fiscal picture, citing rising arrears, delayed payments, and the mandated “return of credits” to Member States as threats that could drain liquidity and disrupt the organisation’s core operations.

Staffing and Budget Reductions

The revised budget also entails a major reduction in staffing. The proposed 2026 funding covers 11,594 posts, down from the original 13,809 — marking an 18.8 per cent cut compared with 2025.

These cuts will primarily affect larger departments and administrative functions, while safeguarding programmes that directly assist Member States — particularly Least Developed Countries (LDCs), Landlocked Developing Countries (LLDCs), Small Island Developing States (SIDS), and initiatives supporting Africa’s development.

The regular budget, funded through mandatory assessed contributions, finances the UN Secretariat’s core functions and activities. It is separate from the peacekeeping budget, which runs on a 1 July to 30 June financial cycle.

Liquidity Crisis Deepens

Mr. Guterres warned that the organisation’s liquidity crisis could extend beyond 2026 and worsen in 2027.

At the end of 2024, arrears stood at $760 million, while a requirement to return $300 million in credits at the start of 2026 will effectively remove nearly 10 per cent of the available cash.

“Any delays in collections early in the year will force us to reduce spending even more,” Guterres said, cautioning that the UN could face returning $600 million in 2027, or nearly 20 per cent of the budget.

“That means a race to bankruptcy,” he added, stressing the urgent need to reduce arrears and suspend credit returns.

Earlier cost-control measures provided only temporary relief. The UN entered 2025 with a $135 million deficit, and by the end of September had collected only 66.2 per cent of its assessments — down from 78.1 per cent during the same period in 2024.

As of that date, only 136 of 193 Member States had paid their dues in full. Major contributors, including the United States, China, Russia, and Mexico, had not yet completed their payments.

Reflecting Fiscal Realities

The 2026 programme budget reflects both financial constraints and the UN80 Initiative, a reform plan aimed at making the Secretariat more agile, efficient, and cost-effective.

Proposed reforms include consolidating global payroll functions, relocating operations to lower-cost duty stations, and establishing common administrative hubs in New York and Bangkok.

Despite reductions, key priorities remain intact:

37 Special Political Missions will continue operating;

The Resident Coordinator System will receive $53 million;

The Peacebuilding Fund will retain $50 million in support.

The Office of the High Commissioner for Human Rights (OHCHR) is also set to expand its regional presence in Addis Ababa, Bangkok, Beirut, Dakar, Panama City, Pretoria, and Vienna.

Next Steps in Budget Approval

In the coming weeks, the Fifth Committee will review the proposal in detail, holding consultations with heads of UN departments and programme directors. The Committee will then submit its recommendations to the General Assembly, which is expected to give final approval by the end of December.

Mr. Guterres also drew attention to a deferred report proposing a mechanism to suspend credit returns whenever liquidity shortfalls threaten full implementation of the budget for the following year.

“The Membership did not reach a decision, and the report was deferred to this session,” he said. “Failure to address the deteriorating liquidity situation could jeopardize critical elements of our programme of work.”