The United Nations is preparing for one of the most significant staff reductions in its history, with plans to lay off approximately 6,900 employees and cut its $3.7 billion operating budget by 20%, according to an internal memo reviewed by Reuters.

The memo, authored by UN Controller Chandramouli Ramanathan, instructs department heads to submit detailed budget-cut proposals by 13 June, in preparation for the 2026 fiscal year beginning 1 January. This drastic measure follows increasing financial strain, largely attributed to delayed and reduced contributions from key member states—most notably, the United States.

Although Ramanathan did not directly name the U.S. in the memo, he described the restructuring as part of “UN80”—a broader organisational overhaul intended to prepare the UN for modern multilateral challenges.

“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,”— Chandramouli Ramanathan, as quoted in Reuters.

He emphasised the need for cooperation and urgency in executing the plan’s aggressive timeline.

In public briefings this month, UN Secretary-General António Guterres acknowledged the severity of the crisis, stating that the organisation faces a period that demands “uncomfortable and difficult decisions.” He signalled a wide-ranging transformation of the UN system, including departmental mergers, relocation of staff to lower-cost locations, elimination of redundant bureaucracy, and cutting operational overlaps.

“These are times of peril, but they are also times of profound opportunity and obligation,” — António Guterres, May 12, Reuters.

The UN’s financial shortfall is driven largely by the United States’ outstanding contributions, which now total nearly $1.5 billion. The situation has been further strained by repeated late payments from China—the second-largest contributor. Together, the U.S. and China fund over 40% of the UN’s budget.

This crisis is not new. Under the Trump administration, substantial U.S. foreign aid cuts severely impacted the UN’s peacekeeping and humanitarian operations. Additionally, the administration withdrew hundreds of millions in discretionary funds, leading to the abrupt termination of multiple life-saving programmes. The current U.S. budget proposal, pending congressional approval, continues this trajectory, either eliminating or drastically reducing funding for several UN bodies.

A U.S. State Department spokesperson, speaking to Reuters, confirmed that UN funding is under active review:

“Funding for the UN, along with other international organisations, is currently under review,”— U.S. State Department, via Reuters.

The funding crunch is already affecting key UN agencies. In April, Tom Fletcher, head of the UN Office for the Coordination of Humanitarian Affairs (OCHA), informed staff that the agency would need to reduce its workforce by 20% to manage a $58 million budget shortfall.

Commenting on the political dynamics, Richard Gowan, UN Director at the International Crisis Group, said some diplomats believe the proposed UN-wide austerity may serve as a signal to Washington.

“Diplomats think that Guterres hopes that if he shows he will make these cuts, then the administration will ease off on their threats to zero out funding for the UN,”— Richard Gowan, via Reuters.

While UN leadership frames the overhaul as an opportunity to streamline operations and modernise its structure, the scale of the proposed layoffs raises deep concern about the organisation’s ability to deliver on its global mandates—from peacekeeping and humanitarian relief to climate action and sustainable development.

As the 13 June deadline approaches, the shape and scope of the planned restructuring remain uncertain. For now, nearly 7,000 UN employees around the world face weeks of uncertainty, as the organisation navigates a financial crisis that could reshape its future.