US plans $725m payment towards its large UN debt

The Trump administration has informed Congress of its intention to pay $725m (R11.6bn) to the UN, a congressional notification seen by Reuters showed, a move aid experts said was a welcome step towards paying billions in dues owed.

The administration has criticised the global body for not living up to its potential and slashed funding to many UN agencies. Asked about the planned payment, a US official said any payments will be contingent on continued reforms of the organisation and added that the US has not transferred any funds by Friday.

The allocation of funds — mentioned in an August 4 state department notification letter to Congress that has not been previously reported — comes before an expected speech by US President Donald Trump to the UN General Assembly in New York next month.

UN secretary-general Antonio Guterres said this year that the UN faced “imminent financial collapse” due to unpaid contributions from member states, and the global body has brought in large budget cuts.

“Over the past six months, the US has achieved historic reforms across the UN — reforms long considered impossible — including the first real budget cut in UN history, resulting in nearly one billion in cuts,” a state department official, responding to Reuters questions about the payment, said in an email.

In April, Devex, a development news agency, reported that the US had set specific conditions for the release of funds, such as more cost-cutting and moves to counter China’s influence.

The Trump administration has carried out an unprecedented shrinking of its federal government, saying it was bloated and has significantly cut back on domestic and foreign grants in an effort it says was to put money into causes that aligned with US taxpayer interests.

The $725m would be less than 20% of the more than $4bn (R64.04bn) the UN said in May that the US owed — though Washington has said that total is much lower and it has made some payments.

Eugene Chen, a former UN official, said such a transfer would help pay UN salaries for a period but might not cover them all. “It keeps the ship afloat a little longer,” he said.

“If the US does not make further payments, it will probably lose its voting rights in January,” he added.

Under Article 19 of the UN Charter, a member state loses its voting rights in the general assembly if its arrears exceed two years in annual fees, though grace periods are possible.

A significant transfer now could avert the need for immediate spending cuts, Ronny Patz, an expert in UN finance with German think tank Idos, said.

“If they pay a big chunk, the UN still runs on zero reserves, but it gets through the year,” Patz added. “If they don’t pay, the UN might really be in trouble for the last two or three months of the year in terms of paying salaries and keeping the doors open.”

The US is the biggest contributor to the UN budget, but under the Trump administration it has refused to make mandatory payments to regular and peacekeeping budgets and has slashed voluntary funding to UN agencies with their own budgets.