Chandramouli Ramanathan (UN Controller) & others on the UN Budget - Press Conference

Okay.
All right.
Good morning, everybody.
Thank you for being with us today.
So as you know, yesterday, you saw the statement that we issued on the budget, and this morning we have three of our colleagues that will be able to answer your questions and give you more context and background as to what is happening with the budget changes.
So first of all, we have Sandra Mouli Ramanatan, whom you know very well, the controller.
He's accompanied by Sharon Borstz who is Chief of Contributions in his office.
And also, we have Taiko Siri, who is the Chief of UN peacekeeping budget.
So So, Sandro, we'll start with you.
You can say a few words.
And then if you also want to if our two other colleagues want to say a few words opening, I'll give them the floor and then we'll take some questions.
Thank you.
Good morning, and a real pleasure to be with you here.
I think there are two things that happened yesterday.
One was the approval of the budget of peacekeeping for 26 27.
We will circulate a small fact sheet.
I think it's not already being given out just now.
On the peacekeeping budget, the member states approved a budget of $5.1 billion, which is about $550 million less than last year, which is a 9.7% reduction.
That's just the big picture.
About 1,100 civilian posts also being reduced.
In terms of real apple to apple comparison of what was before, if you take out the expansion of mandate in Haiti, expansion of mandate in Congo and the reduction in mandate in, I think, South Sudan.
It's about 14% reduction.
Yeah, so we'll give some clary numbers also on that.
A 750 million, something like that.
So that's on the peacekeeping budget side.
There was also a decision they made on a marginal increase in the rates of reimbursement for troops.
Troops went up from, I think, 14 48 to 1,464.68, something like that.
And also, they increase the equipment reimbursement rates by 1.58%.
Financially, collectively, it's $27 million increase.
And that $27 million increase, we have to absorb.
They will not give us a separate budget for that.
So it's taken out of the budget.
Yeah, it's 1448 to 1474 0.68.
We're circulating the CTU, so you don't have to worry about it.
But then it's 1.58% for equipment, net effect 27 million.
So that'll be absorbed by us as part of the budget.
And the original number I gave you on the budget is 9.7% reduction of 550 million.
Budget went down by 550 million to 5.1 billion.
And then if you take out those mandates, new mandates, the real reduction is 14% or $752 million.
Civilian staffing reduction, more than 1,100 positions have been cut.
So that's the big picture on the budget side, but the more momentous decision yesterday was fixing that Kafksk problem that we've been talking about again and again and again in simple terms.
Again, I have a nice deck for you which gives all the data and information, but I'll just summarize it very quickly for you.
You know the old story that Our regulations written in 47 provided that any money not spent like any government has to be returned.
But the problem is, it didn't say return the cash, it said deducted from the next bill.
And in practice, what that meant to us, you're deducting it from the next bill for those who haven't paid their money to start with.
It's like giving a discount before you pay the bill.
And the second thing is, then they changed that last year.
In December, to say, only give it back to those who have paid in full, for those who haven't paid, deducted from whatever they owe you.
You owe the money, they owe you money deducted.
It's common sense.
That's how it started changing in December.
But you're still giving back for the others who have paid in full.
You're still giving back the cash you never collected, and that is the source of our problem.
We are giving back what you have not collected.
Common sense says what you don't spend, give back, fair enough.
But if you haven't collected it, you cannot give it back.
So give back what So give back what you've collected but not spent.
Makes sense.
So the real change that was done yesterday was acknowledging that this 75-year-old rule is pushing the UN into a financial abyss.
And therefore, they made the following changes.
They said effective now from today.
In future, you will give back two types of money always.
One is income that you've earned from interest and revenue, et cetera, because it's backed by cash.
Any money you did not spend from a previous period, blah, blah, blah, blah, nothing to do with liquidity.
So in other words, if you are returning money to member states but had nothing to do with shortage of cash, give it back.
Whatever money you did not spend, they're saying, look at it more carefully.
What part of it was caused by lack of cash? What part of it is normal? If it is not backed by cash, don't return it.
If it is normal, return it.
In other words, from now on, they will look at, have you collected 100% of the bill that you've sent out? If you've collected 100%, there's nothing to do.
You spend the money.
If you collect more than 100%, that means you're collecting arrears.
If you ever collect more than 100%, we cannot spend it because budget is gone.
Then you return the money back.
Because when you spend when you're back to if member states have not paid money to us, some member states have not paid money to us, what is happening is we are not returning some of the money to other member states.
So when you collect the arrears, you find a way to manage your process.
If there is extra money left, give it back to member states.
This is the decision they made.
So I used to show you a big skull and a circle, and that was a vicious circle.
You don't collect 100% of the budget.
Let's say we collect 80% of the budget.
We spend 80% of the budget.
That's fine.
You manage that year.
But now the 20% that you did not spend, they're saying deduct it from next year's bill.
So next year, I cannot collect more than 80%.
How can I spend 100% when I collect 80%? Can't.
That was the vicious circle, in practical numbers is very important.
If they had not made this decision yesterday in real terms today, we would have given up about $225 million and in July 27, another $900 million.
Forget about the numbers.
What does it really mean? $1.1 billion.
We would have had to cut peacekeeping on top of the 800 million that we cut last year.
The 800 million represented nearly 25% of the troops gone.
Imagine peacekeeping with 65% funding.
65% funding.
You're probably going to keep your troops at nearly 50% to 60%.
How on Earth can the UN deliver on a mandate with that kind of so that is the crisis, which is very immediate.
A new Secretary-General comes on board in July 27, the 900 million is gone.
The current Secretary-General has no choice but to initiate a reduction now to survive that 900 million.
So 1.1 billion.
All we did last year was trying to deal with an $800 million problem.
And you saw what happened in peacekeeping.
Imagine now on top of the 800 million that you already have cut, another $1.1 billion.
That's crazy.
Peacekeeping would have nearly collapsed because of trying to operate at 60 or 65% of its original budget.
No way.
That was what they tried to save.
Just pivot for a minute to the regular budget.
On the regular budget also, we are running with hardly any cash.
We don't have cash beyond August.
September money is gone.
We are waiting for collections to survive beyond September.
So, pretty much, no matter what happens, the chances are we're going to end the year with zero cash, meaning barely surviving at a reduced budget.
But we would have returned another $420 million in January.
So if they had not made this decision, another $420 million of a $3.2 billion budget would have gone.
That's another 13% of the budget would be gone.
So effectively, you're going to be operating at approximately 85% of the budget on the program.
So imagine now, $1.1 billion in peacekeeping operating somewhere like 65% and operating at 85% for regular budget in January 2020.
So a USG walks into a complete financial mess.
With 13% of the budget gone for regular budget and more than 20% or 30% gone for peacekeeping.
That is what they were trying to address.
So that's why the financial mess was so huge and the operational impact would have been so catastrophic that member states felt instead of working on the moral hazard that those who have paid should not have to subsidize those who have not paid, that narrative stopped.
We said, No, we have to now save the UN.
And saving the UN means that making sure get rid of a rule that does not make any sense.
And I must particularly thank all of you.
Because your articles of late have increased the awareness of the common sense aspect of this rule.
It does not make sense.
So every time we talk to somebody and we explain it saying, How can you return what you don't have? Not even the UN is so charitable that it can give back what it doesn't have.
So the way I would describe this, therefore, is very simple.
We had a leaking boat.
We plugged the holes.
We get it to shore and try to fix it.
Or think of an aircraft.
I saw AI and air told me, it's like flying a large heavy aircraft on fumes and trying to land it on an aircraft carrier.
Beautiful example.
That's what A told me about the role that we're trying to play.
So what we've got is a little bit more juice to land it more carefully, but that's it.
So that's what member states have given us, the capacity now to try and arrest the decline.
What would have been ideal is if we had waited a little bit longer, raised more cash at least it prevents a crash.
So that's essentially, I think, where we are.
So I'm happy to take questions and try my best.
And I have my two colleagues.
Sharon is the one who is responsible for the scales of assessments, the collections from all member states.
She's my bill collector.
She collects the money, she spends the money.
Peacekeeping.
But she's the one who keeps peacekeeping honest, trying to contain the expenditure, et cetera.
Current year yesterday, we ended the year, two things that have happened.
We only had We had to cut 15% of the budget because of the shortage of money.
So we will probably come in very close to that.
Our tank is empty, cash is $220 million or so, but that is because we have not paid for the troops.
So essentially, the troop contributors, poorer countries continue to finance peacekeeping, which is tough to accept for everybody, including member states.
They don't like it.
So that's why I think you saw some solution to the problem.
Thank you.
Very good.
Should we go straight to questions? Let's go to questions.
Do we have yes, Gabriel? Thanks a lot for the briefing.
This is Gabriel Ozono from Al Jaeera English.
My question is pretty simple.
You gave the analogy of plugging the holes on the boat to get it to shore to get it fixed.
So what needs to be done to get it fixed on shore now? The fundamental problem we have still is that we get budgets, but we don't get the cash to back up the budgets, which means all member states have to pay in full.
That's the fundamental.
There's no way all these fixes do not take away the fact that you cannot operate if you don't have collection.
So probably one way of looking at the problem is, if there is a delayed payment, then it's a matter of borrowing for a short period of time or adjusting the pace of your expenditure to survive.
That's what we've been doing for the last five or six years.
Now we are talking of non payment.
If you don't pay at all, you cannot borrow because you cannot repay.
So that's what happened last year, $780 million not collected, gone.
It's probably not come.
So the solution is unless that money is paid, we cannot go back to normal.
So what are we trying to do now with the new fix in place? If you get the budget, And let's say you collect 90% of it, you can spend 90% of it and survive.
Previously, spending 90% solves this year's problem, but the 10% has to be returned next year.
So next year you only have 90%, even if 100% pay.
But since 100% you never collect, you collect maybe another 90%, you spend less, and it goes on like this.
So the answer lies in there's only one fix to the problem that everybody has to pay, and as long as they don't pay, the UN will struggle.
Is this fix I should have checked this before I came to the briefing, but is this change in the fifth committee, right? Yes.
Is this permanent or is it a certain time frame Four years trial period.
There was a lot of push for three years or five years.
There was a push even to change the rule to change the rule.
But the member states felt the change was necessary, but we need to be sure that it works.
So it's a four year trial period starting from now.
And in three years from now, they said that come back with an assessment of how well it has worked, have the Board of auditors also look into it, so then we can make a decision on how to continue it.
I don't see this as something they can go back on.
You can only improve.
I'll give you a very good analogy.
When you go over the car into a parking lot at the airport to drop off your car, you see those spikes on the ground.
You drive over it, they go on the front, you go in and you try to drive back just to puncture you.
Right? That's what needs to happen.
You cannot go backward, you can only go forward.
Just one analogy.
Similarly, our money for peacekeeping, our peacekeeping budgets are all separate budgets.
So member states used to say, everybody is billed separately, they pay separately, and we are supposed to keep the money separately, which made no sense.
So if somebody shot in one mission, I cannot take the cash from a surplus mission and use it.
Six years ago, we told them, this makes no sense.
So they said, Okay, you can use all the money together.
But they said trial period, three years.
We showed how it improved the payment for troops, how it improved the operation.
They wanted to make it permanent.
Some member states said, No, no, no, another five years trial.
In the UN, there's one thing I know nothing is temporary.
Let's go on this note.
Let's go to Emily.
Thank you, Emily Boer from ASP News Agency.
You said that for the general budget, there's basically no cash beyond September.
Can you give us an update on the two main contributors? Like, we heard that China, I mean, different to previous year has paid part of its contribution already.
And has the US made any kind of new contribution since I think it was in March that they gave a little bit? Thank you.
I think on the regular budget, our current cash will, as you point out, take us through end of August.
The main collection we're still expecting is from the US and China.
China owes us another sorry, $428 million, which we expect them to pay maybe in September and December into installments.
We have told them it would be very nice if we can get a reasonable amount of money in August, end of August or early September to help.
The US also was assessed $767 million.
They paid 160 We've been told that they were planning to make a payment in April and July.
The April payment didn't happen, so they are still telling us that the payment is on its way and we're expecting a payment, and both member states are aware that by August we run out of cash, so we expect the US to pay pretty much all of its money this year, and also the Chinese also to pay.
So our assumptions are based on collection from both of them.
Now, if either of them doesn't pay in time, we have a little bit of a crisis in September, but if they don't pay at all or pay less than their original amount, then we have a little bit of a challenge at the end of the year.
But even if both of them pay, we're going to end the year with pretty much our cash gone, right? So not much reserves.
So when you start the new year, the good news is we don't have to worry about returning another $400 million.
So the problem has come down by $400 million we collect and spend.
So if we collect 95%, we can spend 95%, right? But please bear in mind, the two member states contribute 42% of our budget for regular budget.
And if they pay towards the end of the year, we can as of today, we collected 56% for this year.
Now, staff salaries is 70% of the budget.
So you don't have enough money.
If they don't pay you by September, you need 75%.
And you're not there, then that's the shortage.
And our reserves normally are good enough.
But because of the arrears, the reserves are gone.
So we are operating without real reserves, and we don't have the ability to go and borrow from the banks.
So that's part of the problem now.
So I hope I answered the question.
Yeah.
All right.
So let me go, go ahead, then I'll go to Sala then to bank.
Damlaa from Past Blue, I was hoping you could explain again.
I mean, you said earlier that the articles that comes from also us understanding what's happening.
If you could explain again just how the resolution adopted yesterday is saving things.
And if you would reverse the earlier question in answering for peacekeeping, who's in words and what's that? Yeah, for peacekeeping as well.
Thank you.
Bear in mind that we did not collect, let's say, $850 million for the year that ended yesterday for peacekeeping, $850 million.
We reduced our expenditures also almost by $800 million.
So we're going to end the year more or less with the same level of our years, a little bit more than at the end of it.
So when we're starting the new year now, We don't have to return the money that normally we would have returned, which means that, okay, my cash doesn't get much worse.
This year, if both US and China both pay in full, we could normally go back to a normal operation for peacekeeping starting from July.
But because we started last year was bad and because we came down with virtually no cash, we would have to be careful that we don't start spending fast.
But the idea is with the new provision in place, they're saying, if you collect 100%, you can spend 100%.
If you collect 95%, you don't have to return the difference in what you spent.
We don't have to worry about normally our current way of thinking is we have to worry about two things.
Do I have cash to spend this year? Then I also have to worry, but whatever I did not spend this year, I have to give it back, which means I would reserve the cash, but I didn't collect it.
Now don't have to worry about not being returning.
Our main concern is if you collect 95%, you can spend 95%.
It goes to your original question.
If they don't pay in full, even with all these changes, if they don't pay in full, you can only execute whatever you collect.
But if you're smart in anticipating the collection and stick keep your spending, you can survive at that level.
Our expectation is at least at 95% if we can keep on checking along, it's fine.
But if you have another instance where payment doesn't come in, then again, the organization goes down.
That's essentially the situation.
Now, the decision yesterday was not limited to peacekeeping.
The decision they made is across all funding the regular budget, peacekeeping, and tribunals.
Going forward, you will not have to return money that you haven't collected.
If you collected and did not spend, it should be returned.
That's the decision they made yesterday.
Essentially, that is the decision.
I hope I answered your question.
Yeah.
But also a part of that document said that credit should be kept separately.
Can you explain that? Okay.
So what happens is in the past, You try to return all the money, and our proposal many times was, we cannot give you back the money, but it's your money.
You have a right to get that money.
All member states have a right to the money.
So instead of keeping it in a pool, now we are saying, okay, this is the amount of money discount I should give back to you.
So it's now calibrated and you will now know exactly who is owed.
How much does the UN owe to the 193 member states for peacekeeping this year, for next year's peacekeeping next year's AB, next year's Tribunal.
There'll be a clear payable from the UN for all of that.
But that money will never be paid till you collect.
So there will be two things that will be there.
You will know what money is owed, let's say, from the US and a few other countries.
You will know how much the UN owes to all the 193 member states.
If you collect this, you start paying this.
If you cannot collect, you cannot pay.
So that's what the books will be.
I owe money, I'm due money.
That's one part.
Then how you operate.
Anticipate, you've got a budget of 5.1 billion.
Do you think you're going to collect 90%? Okay, 90%.
Your expenditure plan is 90%.
And that's the end of it.
If you can keep it like that, you're good, right? That's what happened last year.
We knew we are going to collect only 85%.
So we said, let's spend 85%, but you don't have to return the 15%.
If you had to return the 15%, we're dead because all you've done is postpone the problem to a year later.
That has stopped.
At least it's one part of the messy rules that are being fixed.
If the trial shows after four years means eight cycles, for peacekeeping and four regular budget I'm not even counting the tribunals, just peacekeeping and regular budget.
So that's eight cycles for them to see how it has worked.
Then three years from now after six cycles there will be a chance to say, has it worked? Is it doing the job? The only risk we run here and that's why I gave the example of the boat and the aircraft.
It prevents a crash or prevents a sinking.
It does not do away with all the problems.
So the expectation should not be that suddenly we're in great shape and we're going, No, we have prevented a crash.
We've ensured that the boat can get to the coast.
It does not mean that it's strong enough now to keep sailing because it still has problems.
It is still vulnerable.
To any non payment by member states.
If they pay 30%, sorry.
If they pay 70%, we can only execute 70%.
So regardless of what budget they approve, you can only execute what you think you will collect.
But it's still better than today where you not only cannot execute properly, you also have to return, which means next year you execute even less.
So it's a massive improvement.
And the only reason it happened was awareness of the problem and the recognition that literally the budget has become meaningless if you cannot execute it properly.
So they're trying to say, okay, because we cannot just keep executing more with less, but now we're saying less with less, but you figure out what less means.
And can you live with less? I think they've realized they cannot live with less, and therefore they want to find a way to make it financially suable.
So the moral hazard, as they call it, of people who are paying, subsidizing those who are not paying is still there, but is no longer central stage.
The central stage is, how can the UN continue to operate? So the member states are very keen on making the UN sustainable financially.
And that's what this whole decision is about.
Celia and then Cia Var confidential, could you tell me how much money you saved by getting rid of over 1,000 low level purse? Because as far as I heard, nobody who had like a high level purse was fired or asked to leave.
How much did you save? You're talking about the regular budget? Yes.
Yeah.
Okay.
We cut 21% of the workforce.
21%.
So if anybody tells you how much does it mean? 3,000 plus post, 3,000 plus posts.
I don't know where you're getting 1,000 posts from.
It's 3,000 positions that were eliminated.
3,021% of the workforce.
Please remember this.
21% percent of the workforce reduced without reduction in what we are supposed to deliver.
People are missing this point.
We've been asked to deliver exactly what you're delivering today.
The member states have not said deliver less deliver the same 3,003.
Money, I have to get you the number.
What is the number? Do you remember? I'd like to know.
Sorry, I'll send you the number.
Don't worry.
I'll definitely give you.
Because the budget was, if I'm not mistaken, a reduction of at least 15%.
No, 15% approximately 15% to 3,004.
But I'll get you the number.
Sorry.
If you compare 25 to 26, the budget went down by 500 million? Probably, five, six.
We'll get to the numbers.
I'll give you a number.
But for me, it was 21% of the workforce since we had kept many of the positions vacant because we were not able to fill them.
So therefore, it's not bodies leaving.
And then we tried to accommodate the people as best as we could.
We couldn't accommodate everybody.
And then peacekeeping separately from that, there's more than 1,000 people who also had to go home by giving them separation packages and asking them to leave.
Otherwise, we could not have met the goal.
But to answer your second part of your question about senior level and junior level packages.
Okay.
So the senior level positions in the UN are tied to our structure.
Structure, the organization, the department, et cetera, the SG has no authority to change those structures without going to the General Assembly.
But before he goes to the General Assembly, he has to go to another committee that's called program coordination.
He has to change the plans.
He has to submit everything.
Only if they approve he can cut the resources, which is part of the reason why CNA level positions could not be included in the first tranche.
In the second tranche that we submitted now, The General Assembly told us to come back in 2028 with further reductions so that there's time for the whole process to work.
Nevertheless, we put forward some obvious ones where positions could either be eliminated or we could combine them in sort of three ASGs, two ASG.
So one ASG does the two portfolio, USG became an ASG reporting to another.
So those are the kinds of things we've done.
So we focused on D one, D two, ASG USG.
But again, not wholesale because the structure has to change.
Can make more proposals, but it has to go through the committee.
So 2028 was the target given by the GA.
So the SG said, I'm doing the first two tranche, not many, but important statements on direction to see if the GA approves the direction.
You see the funny part in all of this is the SG makes many proposals.
Member States don't always like depending on what their constituency is.
So they don't necessarily always buy into everything that he proposes.
Take the example of the 21% workforce that we reduced, nobody had a problem with that.
But when we proposed only 260 relocations, only 260 positions were being relocated from two places that are obviously higher cost, New York and Geneva.
Everybody's okay with New York okay.
Geneva is not okay.
But more importantly, where it lands is most important.
And it's no longer cost.
It's pure politics.
So Pan, go ahead.
Hi.
Sorry.
Sorry.
Behind you.
Then I'll come back to you.
Pan.
Go ahead.
Go ahead.
P.
No, my name is not Pen.
I'm sorry.
I missed the confusion.
My name is Shan.
Yeah.
I'm sorry.
I'm sorry about that.
My mistake my news agency.
I have several questions.
Can you hear me? Okay.
Go ahead, P.
Oh, whoa.
Hold on.
Thank Go ahead.
Go ahead.
Okay.
I have several questions.
First of all, the Secretary-General said yesterday in his statement he called for this change early in his mandate.
That was about ten years ago.
How come that this obvious loophole has been allowed to exist for so long time? What were the main roadblocks on the way? Question number one.
Question number two, you said that China owes $428 million.
I understand China has paid for its regular budget dues.
Is this for the last peacekeeping cycle? Question number two, number three.
Can you give us the numbers that the United States the unpaid dues of the United States, both for the regular budget and peacekeeper budget By the way, do we have a place to go for these numbers? Which country owes how much so that we don't have to ask these questions repeatedly in this room.
Thank you.
The roadblock is extremely simple.
This is from 1950 when the rule was formulated.
They recognized that this rule would only work if everybody paid in full and the UN had enough working capital.
When the UN was set up, the working capital was 30 weeks worth of expenditure.
But now the working capital is barely like eight weeks worth of expenditure.
The reason why it's not working, multiple attempts have failed because as I said before, any solution we are attempting is penalizing those who are paying.
It is not penalizing those who haven't paid.
So it's a subsidy, short term subsidy, not long term.
In the long term, everybody gets back their money, but in the short term, They have to pay in order to keep the organization running.
So for instance, if you take the example now, we're not giving back credits.
It is rightfully due to them.
So we're saying at 900 million should be returned.
It is their money.
We didn't spend it, but they're not going to get it back.
Instead, we're going to say, we're going to create a payable for you.
Keep watching to see when the arrears are paid, then you will get your money.
So that problem that those who have paid are being asked in a way to wait while those who haven't paid don't have any reason to pay except Article 19, if it kicks in.
There's nothing else.
There's no other disincentive in the whole process.
And that's the reason why they call this a moral hazard, and therefore they say, we will not solve this problem.
So we've reached a point where you can be looking at the moral hazard, the UN will cease to exist progressively or will be a colossal failure in peacekeeping because you're still being asked to do the whole mandate, but with 65% of the funding, not practical.
That's the reason why.
So what has changed now is it's become a tipping point Financially, it has become a tipping point which translates to an operational disaster, right? That's why it's changed.
Now, the Chinese outstanding money, the China owes $428 million for regular budget.
Its normal payment pattern is it makes one payment in April or so, then it makes another payment in September, another payment towards the end of the year.
Last year, they brought forward a few more things.
So we are expecting this $428 million to be paid either in September, partially and before.
They will definitely pay the amount in full.
By the end of the year, they'll be fully paid.
For peacekeeping, they still owe us about $65 million for the year that ended, and then there will be new assessments coming up in July.
Now, for the US, they owe the US owes at this point of time, the US they started the regular budget with 1.5 billion that they owed us at the beginning.
We add another $767 million.
They paid us about 160, so it's still over 2 billion.
We're expecting another payment from them.
So maybe they'll end the year with 1.3, 1.4.
We don't know.
We have to wait and see.
For peacekeeping, the US started the year with 995 million $995 million, almost 1 billion.
They paid about 680 million, so they'll end the year with 1.7, 1.8 billion.
This year, we hope they'll pay more or less in full, right? So that's the picture.
Now, in terms of where this information is available, can I ask you to point out.
You can see the information on the committee on contributions website.
Usually, it's the financial situation presentations are there for October and May, and that's usually where we post the information for the member states.
There's also a table on how many member states have paid in full, honor roll information and other information like that there.
Yeah.
Thank you.
And in between, you can always reach out to us and we reach out to Sharon.
Very good.
Let me I think you had a question.
Then I will take a final question.
I see Magdalena online who has a question, and then we will wrap up.
Hi.
Kate Crenshaw with the Japanese newspaper, the ri Simbun.
So I'm just wondering if you can clarify how you managed to get the 9.7% percentage reduction and which comparison compared to last year's budget this is.
So I'm finding the reported amount to be 5.38 for last year, and which doesn't isn't like it out.
I'm not sure I just I'm getting the math wrong.
I don't blame you for not being able to figure it out.
Many of us cannot also figure it out.
And that's because of this weird concept we have.
The Americans tax their citizens like everybody else.
But they're not supposed to tax UN staff.
So there's this weird mechanism that has been set up where only for the US we bill them in advance for all the taxes for their citizens on a projected basis.
We call it staff assessment.
And then we pay out to the IRS.
If we pay more, we ask the Americans to pay us more.
Usually, we pay less because we anticipate more and we pay less.
The money sits there on an account.
That's how it works.
But when you look at the budget and you look at the assessments that went out, the bills that went out, only the US for the regular budget, when you take the overall assessment, only about $60 million.
We add to the bill.
Nobody else bill includes anything.
But when you look at the budget, there's about $300 million sitting in a budget section.
For this amount, but there's also an income sitting separate, almost the same amount, $240 million.
People compare, therefore the budget, and you end up with a different scenario.
That is why you don't get the number.
The actual number is 9.7% reduction, $550 million.
Okay? And then, yeah, I think that's the best number for you to keep 9.7%, $550 million.
Doesn't matter, some mandates went down, some mandates went up, it's the net effect of all of them.
Thank you.
And let's go online to Magdalena.
Hi.
Can you hear me? Yes.
Go ahead.
Oh, perfect.
I'm Magdalena with Bloomberg News.
I have two questions.
So one, what's the worst case scenario? I mean, as you say, you only have funds until the end of August? What will you do if no money comes and would this affect high level week? And then my second question is, I think it was in January the Secretary-General warned that you wouldn't have funds past July.
So how did you manage to stretch it? I mean, I guess, only a month, but how did you manage to make do? The calculation of July was if you spend the budget normally, 100% of the budget based on our projected collection of 90%, we projected we would collect 91%.
Had to spend 100% of the budget, we'd run out of money by July.
In the deck I gave you, you'll see one slide there showing you how the money would have run out by July.
But what we did was, we did not spend 100% all through the year.
We've not allowed hiring.
We've not allowed any spending, which is not necessary or urgent.
Maybe necessary, but if it's not urgent, we said postpone.
We've depressed the spending to carve out and therefore, with 56% collection, we've stretched the money all the way through August.
But in August, all our reserves, everything will be gone even with reduced spending.
If you had to go beyond August worst case scenario, ideally, as I told the Fifth committee, there should not be a high level week, ideally.
That's the best solution.
I told the Fifth committee very point blank.
If you ask me, what are the scenario, there should not be high level week because you don't funded us.
But then, of course, they woke up, and of course, it's not going to happen.
We are going to make the high level week happen by scrunging around and stopping other payments.
I have a little bit of wiggle room sometimes.
I owe money to UN partners who are not commercial vendors.
I sometimes owe money to a construction project.
I say, You know what? I'm not going to give you the money, delay it a little bit.
So that's what I do I juggle it a little bit and assess the cost of like, for instance, we had to open this gate here.
Okay, found out about $50,000 per month.
Okay, fine.
All right.
Everybody is screaming their heads off.
Okay, open it up a little bit.
But then I have to shut something else somewhere else.
That's how it works, right? So I think we will make the high level week happen no matter what.
But that's why we are telling both the member states that have to pay, at least get us the money, and I'm pretty confident they will.
There's no reason for us to think that they're not going to pay.
So I'm not yet working on a worst case scenario.
Normally, I do, but I feel far more than optimistic that they will pay, so I don't have to worry about that.
I don't want to worry about theoretical problems.
I worry about it when I get closer to August.
So at this point of time, we just focus on everything else in it, right? So I think we will have you back in August, possibly.
So on this note, thank you so much.
We will wrap up.
I just wanted to flag that at 11, of course, as you know, there's another press briefing here with the Secretary-General, with the co chairs of the International Scientific Panel on AI.
And just a quick note related to the budget just to flag you may have received in your inbox some updated embargoed remarks.
DSG will have a few words on the budget before he goes to his remark on the panel.
So we see you back here in 15 minutes.
And thank you so much to Sandro, Sharon, and Tao.
Thank you so much.