UN Alters Refund Policy to Address Financial Crisis

The United Nations has implemented changes to its financial policies to address long-standing financial difficulties. Previously, the U.N. refunded unspent funds to member states regardless of their contribution status. This practice, intended to prevent financial excesses, became unsustainable as rebates were also given to countries that were late in payments or had not contributed at all.

A significant factor in the U.N.’s financial challenges was the non-payment from the United States, its largest contributor at 22% of the budget. The Wall Street Journal reported that China was overdue by approximately $400 million. Secretary-General António Guterres warned that the organization faced a “race to bankruptcy.” In response, the U.N. General Assembly voted to amend this budget rule to tackle the financial instability.

Annalena Baerbock, the General Assembly President, highlighted in her address to the European Parliament the “Kafkaesque financial rule of reimbursing funds never received,” contributing to a severe liquidity crisis. Following the resolution, Baerbock confirmed that the General Assembly had prevented the immediate financial collapse of the U.N.

Financial Challenges Facing the U.N.

Annual U.N. dues are mandatory, calculated based on a member’s gross domestic product. Former U.S. President Donald Trump expressed dissatisfaction with the U.N., withdrawing the U.S. from several agencies, including the Population Fund, UNESCO, the World Health Organization, and the U.N. Human Rights Council. He also announced reduced U.S. contributions to peacekeeping efforts.

The U.S. accounts for about 95% of the U.N.’s outstanding payments, totaling approximately $2.2 billion. By the end of 2025, the U.N. reported a peak of $1.6 billion in unpaid assessments. The total arrears, including budget, peacekeeping, and two international tribunals, exceeded $6.5 billion.

In January, the U.N. warned of a shutdown of its New York headquarters by July without dues payments, particularly from the U.S. The previous month, the U.N. General Assembly approved a $3.45 billion budget for initiatives in peace, stability, sustainable development, and human rights. Guterres welcomed the decision to change the refund rule, emphasizing its significance for peacekeeping operations. He stated, “This decision will allow us to manage resources in a more predictable and responsible way, especially for regular and peacekeeping budgets.”