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NEW YORK CITY, New York: Facing a deepening financial crisis, the United Nations Secretariat is planning to cut 20 percent of its US$3.7 billion budget and slash around 6,900 jobs, according to an internal memo reviewed by Reuters.

The move would take effect from January 1, marking one of the most sweeping cost-cutting drives in the organization’s history. The directive asks departments to submit detailed proposals for reductions by June 13 as part of a review process dubbed “UN80.”

The effort is aimed at reshaping the UN to meet today’s challenges, said Chandramouli Ramanathan, the UN Controller and author of the memo. “It is an ambitious effort to ensure that the United Nations is fit for purpose to support 21st-century multilateralism, reduce human suffering, and build better lives and futures for all,” he wrote.

Though the memo doesn’t name specific countries, a significant source of the crisis is the United States, which contributes nearly 25 percent of the UN’s budget and currently owes almost $1.5 billion in arrears and unpaid dues. The Trump administration’s funding cuts have already disrupted multiple UN humanitarian agencies.

Secretary-General Antonio Guterres has warned of “uncomfortable and difficult decisions” ahead. In a May 12 briefing, he outlined options such as merging departments, shifting operations to cheaper locations, eliminating duplicate roles, and consolidating or downsizing some agencies.

“These are times of peril, but they are also times of profound opportunity and obligation,” Guterres said. “It may be easier and even tempting to ignore them or kick the can down the road. But that road is a dead end.”

China’s late payments further compound the financial strain, leaving the UN short of liquidity. Together, the U.S. and China fund more than 40 percent of the UN’s operations.

Separately, Tom Fletcher, head of the UN’s humanitarian affairs office, said in April that a $58 million shortfall would force his department to cut 20 percent of its staff.

Some observers believe the cuts are strategic. “Diplomats think that Guterres hopes that if he shows he will make these cuts, then the administration will ease off,” said Richard Gowan of the International Crisis Group. “It’s also possible that the administration will just pocket the cuts and not make any concessions.”