FROM: DE: Catherine Pollard, Under-Secretary-General for Management Strategy, Policy and Compliance      

SUBJECT: Measures to manage the financial situation of the Organization         

1. In his memorandum of 28 January 2020 to all heads of entities funded from regular budget, the Secretary-General expressed caution about the precariousness of the financial situation for 2020. He drew attention to the risk of insufficient cash to implement the programme of work for 2020, unless Member States paid their contributions on time, and set out revised emergency measures for regular budget entities to limit or curtail expenses to the extent possible. He stressed that he would continue to assess the situation to determine if, and when, additional measures would be required.    

2. Following a recent such assessment, and noting the deteriorating liquidity situation in both regular budget and peacekeeping operations, the Secretary-General has directed additional measures across all Secretariat entities to manage expenditures and liquidity. He has written to Member States today to raise the alarm about the deteriorating liquidity situation and inform them that he is once again compelled to implement additional measures that may hinder mandate delivery, and reiterated his earlier requests for durable solutions to the problem.   

3. Although the immediate impact of the move to alternate working conditions in response to the COVID-19 outbreak will lead to reductions in travel, contractual services, and general operating expenses across all budgets, we also anticipate new demands upon our operations and services as we respond to the global health crisis. We have taken this into account in formulating our measures to deal with the evolving financial situation.   

4. In order to ensure that all Secretariat operations in headquarters and the field can continue, that salaries and entitlements can be paid on time, and other financial obligations met without delays, I am outlining below a series of measures to manage expenditures and liquidity.    Liquidity situation of regular budget operations (including SPMs)   

 5. Contributions for regular budget assessments have sharply declined in the first quarter of 2020 relative to earlier years; the payment of assessments by Member States currently stands at 42 per cent compared to 50 per cent by this time in earlier years.  This has resulted in a collection gap of more than $220 million. Outstanding contributions for regular budget have reached $2.27 billion; we also do not have a clear indication of when many outstanding payments might be received. Therefore, we risk confronting a cash deficit sooner in the year unless we slow down spending.   

6. It has therefore been decided to:    • temporarily suspend all hiring for regular budget vacancies, including TJOs, until the situation improves;     • limit all non-post expenses and postpone all discretionary spending unless it is directly and immediately linked to ongoing mandated activities which are not impacted by the restrictions caused by the pandemic.    Liquidity situation of peacekeeping operations  

 7. Peacekeeping operations also face increasing liquidity pressure. Outstanding contributions stand at approximately $3.16 billion. The current cash position of about $1.4 billion is barely sufficient to maintain field operations through the end of June. There is not room for payments to troop and police contributing countries for the March and June quarterly cycles, which will require nearly $1.1 billion.    

8. For the March payment cycle, DOS and DMSPC are jointly evaluating a strategy for ad hoc payments to troop and police contributing countries, pending confirmations from Member States about upcoming contributions. In today’s letter to Member States, the Secretary-General also sought notification and confirmation of plans for their scheduled payments in the peacekeeping cycle which begins in July, which will help us to plan and adapt reimbursements to troop and police contributing countries for the June cycle.    

9. I call on all field missions to urgently re-evaluate and re-prioritize their activities in order to address their greatest operational needs including in response to the pandemic. Recruitment should be slowed, and additional measures taken to contain expenses to the extent possible.  The Controller’s Office will work with the Departments of Peace Operations, Political and Peacebuilding Affairs, and Operational Support in order to provide guidance and assistance specific to field missions.    Financing of extra-budgetary activities   

10. While liquidity may not currently be problem for extra-budgetary activities, we must be prudent in managing their fixed costs, especially when we are unable to execute the programmes that these funds have been provided for. I urge you to evaluate all your extra-budgetary funding carefully, and seek appropriate extensions for such projects and programmes, to ensure that we are not confronted with requests for refunds of expenditures already incurred. The financial regulations prohibit the financing of extra-budgetary activities from assessed funds. 

11. I recognize that these measures will hinder our ability to carry out the work of the Organization at a time when the world needs the United Nations more than ever, but we must exercise maximum discipline in order to ensure that we can carry out our mandates without serious disruption.  Please closely monitor cash outflows for your activities and distribute spending based on available liquidity, in consultation with the Controller’s office.   

12. Not only will the Organization undertake unforeseen expenditures as a result of the COVID-19 pandemic, but postponed or suspended activities, such as the rotation of contingents, will likely spill into the next fiscal cycle. We also anticipate disruptions to supply chain and procurement. We will factor all these into our budget performance plans and reports.  

13. I count on your cooperation, collaboration, and support to ensure that we can continue operations despite the gravity of the financial constraints we face.    

14. I wish you and your loved ones health and safety.     

cc: Ms. Maria Luiza Ribeiro Viotti
Mr. Chandramouli Ramanathan
Ms. Martha Helena Lopez
Mr. Robert Piper
Mr. Christophe Monier

Distribution List:     Mr. Movses Abelian, Under-Secretary-General for General Assembly and Conference Management (DGACM) Major General José Eladio Alcaín, Head of Mission and Chief Military Observer for the United Nations Military Observer Group in India and Pakistan (UNMOGIP)  Ms. Olga Algayerova, Executive Secretary of the United Nations Economic Commission for Europe (UNECE) Ms. Armida Salsiah Alisjahbana, Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) Ms. Inger La Cour Andersen, Executive Director, United Nations Environment Programme (UNEP) Ms. Elia Armstrong, Director, United Nations Ethics Office Ms. Michelle Bachelet, United Nations High Commissioner for Human Rights (OHCHR) Ms. Zainab Bangura, Director-General of the United Nations Office at Nairobi (UNON) Ms. Alicia Bárcena, Executive Secretary of the Economic Commision for Latin America and the Caribean (ECLAC) Ms. Bettina Bartsiotas, Director ad interim of the 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