Summary

Because many member states are in arrears on their assessed contributions, the United Nations has been covering its operating expenses by deferring payments to countries contributing troops and equipment to U.N. peacekeeping efforts--essentially borrowing from these countries--and spending cash kept in peacekeeping accounts. As of February 1998, the United Nations reported that 166 member states owed about $2 billion. Six countries owed 91 percent of that amount: the United States, Ukraine, the Russian Federation, Japan, Belarus, and Brazil. The United States owes about $1.3 billion for the regular and peacekeeping budgets, a situation that has made it difficult to advance U.S. positions at the U.N. and has distracted debate away from the merits of particular issues. The arrears situation has not, however, always had a clear impact on the outcome of individual issues.

GAO noted that: (1) its analysis indicates that the U.N. has been able to pay its external creditors and its personnel costs while maintaining an overall positive cash balance; (2) although the U.N. has reported a negative year-end cash balance in its regular budget account for the past several years, it has been able to cover operating expenses by deferring payments to countries contributing troops, equipment, and other services to peacekeeping efforts; (3) these peacekeeping accounts are reimbursed as U.N. members pay their regular budget assessments; (4) the U.N.'s financial problems have been primarily caused by the accumulation of unpaid assessments and the late payments of assessments by a large number of members; (5) although some members pay their assessments by the due date, most make partial payments throughout the year; (6) as of February 28, 1998, the U.N. reported that 166 member states owed about $2 billion for arrears; 6 countries owed about 91 percent of this amount; (7) the other 160 countries owed about 9 percent of the unpaid contributions; (8) in some cases, unpaid contributions have been the result of the members' inability to pay; (9) U.N. records show that the United States is about $1.3 billion in arrears for the regular and peacekeeping budgets and is not in arrears for the international criminal tribunals; (10) according to the U.N. Under Secretary General for Management, the continuing large amount of arrears has created a structural deficit that could develop into a serious financial crisis if members begin demanding payment of amounts due them for providing goods and services to U.N. peacekeeping operations; (11) according to the U.N. Under Secretary General for Management, the only way for the U.N. to circumvent the chronic deficits in the regular budget is to borrow from peacekeeping accounts; (12) the U.S. arrears situation at the U.N. has contributed to a difficult environment for advancing U.S. positions and has distracted the debates away from the merits of the particular issues; (13) U.S. officials have been informed by representatives of other U.N. members that the United States will not regain the Advisory Committee on Administrative and Budgetary Questions seat until its arrears are paid in full; and (14) GAO's analysis of U.S. payments due through 1998 indicates that the United States could be sufficiently in arrears to lose its General Assembly vote in January 1999 if it does not legislate or pay an additional amount between $211 and $241 million by December 31, 1998.