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U.N. official warns of “dire” financial crisis due to coronavirus

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The United Nations is facing a “dire” liquidity crisis as it deals with added expenses related to the need to “respond to the global health crisis” of coronavirus, according to an email from Movses Abelian, the U.N. undersecretary general for General Assembly and conference management. That email was sent to explain a memo from the undersecretary general for management Catherine Pollard, and both documents were obtained by CBS News.

“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,” Pollard wrote in her memo on April 1.

Pollard said that due to 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.”

The austerity measures outlined in the memo, she wrote, “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.”

She said that the U.N. will “undertake unforeseen expenditures as a result of the COVID-19 pandemic.”

The management chief said contributions for regular budget assessments have sharply declined in the first quarter of 2020 relative to earlier years, explaining that the payment of assessments by Member States has “resulted in a collection gap of more than $220 million.”

The memo said the U.N. will temporarily suspend all hiring for regular budget vacancies 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.”

Peacekeeping operations around the world also face “increasing liquidity pressure,” she said. 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,” Pollard wrote. “I count on your cooperation, collaboration, and support to ensure that we can continue operations despite the gravity of the financial constraints we face.”

Abelian sent an email with further explanation of the Pollard memo, also obtained by CBS News, that said the world body is using up most of its reserves: “In the first three months of the year, the Secretariat has utilized most of the cash balance carried over from 2019 which has dropped from about $200 million to $50 million at the beginning of 2020.”

Also on Wednesday, the U.N. Secretary General, Antonio Guterres, wrote to the 193 member states that the U.N. is under “increased financial constraints” related to the coronavirus coupled with shortfalls related to a decline in payments of assessed dues by countries in addition to arrears by many nations, the U.N. Spokesman, Stephane Dujarric told reporters.

“We ended 2019 with arrears of $711 million, the highest level for a decade and a 34% increase compared to the previous year,” the U.N. chief said in his letter.

The U.N. chief has sounded the alarm before. In October 2019, he warned of a U.N. cash shortage and urged countries to pay up to “avoid a default,” which many countries did.

But the expenses related to the coronavirus and the inability of countries to pay this year has presented a new crisis. As a result, Guterres has launched two funds, one for $2 billion for relief to nations hit by the virus, and another dedicated to the pandemic where he has called for 10% of global GDP, or $8-9 trillion.

The World Health Organization, a specialized agency of the U.N. that is funded separately, has also sounded the alarm, calling for contributions.

The “WHO, U.N. Foundation and partners launched a first-of-its-kind COVID-19 Solidarity Response Fund to raise money from a wide range of donors and support the work of WHO and partners to help countries respond to the COVID-19,” Tarik Jasarevic, spokesman for the World Health Organization, told CBS News on Saturday.

The COVID-19 Response Fund says that it needs total resource requirement of $675 million and has received $274 million with $47 million in pledges, including $15 million from the United States.

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