UN Faces ‘Race to Bankruptcy’ as Guterres Unveils Sharply Reduced 2026 Budget

Speaking to the Fifth Committee of the General Assembly – which handles UN finances and administration – Mr. Guterres described a deeply precarious outlook, with high arrears, delayed contributions and the “return of credits” threatening to wipe out liquidity and undermine core operations.

Staff cuts

The revised budget also reduces staffing from the original 2026 proposal funding 13,809 posts (10,667 regular posts plus 3,142 Special Political Mission posts) to 11,594 posts – an 18.8 per cent cut compared with 2025.

These reductions target larger departments and administrative functions, while protecting programmes that directly serve Member States – particularly Least Developed Countries, Landlocked Developing Countries, small island developing States, and advocacy for Africa’s development.

The regular budget, funded through mandatory assessed contributions from Member States, covers the core programmes and operations of the UN Secretariat.

In addition, the UN has a budget specific to peacekeeping operations on a 1 July to 30 June cycle – while the regular budget operates according to the calendar year.

Runaway liquidity crisis

The UN chief warned that the current liquidity crisis has serious implications beyond next year, into 2027.

High arrears at the end of last year, totalling $760 million, coupled with a requirement to return $300 million in credits to Member States at the start of 2026, removes nearly 10 per cent of the budget from available cash.

“Any delays in collections early in the year will force us to reduce spending even more…and then potentially face the prospect of returning $600 million in 2027, or about 20 per cent of the budget,” he said.

“That means a race to bankruptcy,” he added, reiterating the urgent need to reduce arrears and suspend the return of credits.

Earlier measures to limit spending gave only temporary respite.

The UN entered 2025 with a $135 million deficitand by the end of September had collected only 66.2 per cent of the year’s assessments, down from 78.1 per cent at the same point in 2024.

As of that date, only 136 of the 193 Member States had paid their assessments in full. Several contributors, including the United States, China, Russia and Mexico had yet to complete their payments.

Reflecting fiscal realities

The revised 2026 programme budget reflects both fiscal realities and the UN80 Initiative a wide-ranging reform effort to make the Secretariat more agile, resilient and cost-efficient.

Proposed efficiencies include consolidating payroll into a single global team, relocating functions to lower-cost duty stations, and creating common administrative platforms in New York and Bangkok.

Key priorities remain, despite the cuts: 37 Special Political Missions will continue operations, the Resident Coordinator System will be funded at $53 million, and the Peacebuilding Fund at $50 million.

The Office of the High Commissioner for Human Rights (OHCHR) will expand regional offices in Addis Ababa, Bangkok, Beirut, Dakar, Panama City, Pretoria and Vienna.

What happens next?

Over the coming weeks, the Fifth Committee will discuss the proposal with heads of UN Secretariat departments and senior programme managers.

The Committee will then present its report with recommendations to the General Assembly plenary, with final approval of the UN budget expected by the end of December.

Mr. Guterres also noted the report on improving the financial situation, which proposes a mechanism to suspend credit returns whenever liquidity shortfalls threaten full budget implementation of the following year.

“The Membership did not reach a decision, and the report was deferred to this session. Failure to reach an agreement on addressing the deteriorating liquidity situation could jeopardize critical elements of our programme of work,” Mr. Guterres said.