World Health Organization Director General Margaret Chan said that WHO need to be renewed as there is a drop in voluntary contributions by member states and thereby the body faces losses.
"Reform is essential. And WHO is now embarking on the most extensive administrative, managerial, and financial reforms, especially financial accountability," Chan told delegates as the UN agency kicked off its 64th assembly.
Advertisement"When WHO was dealing mainly with germs, hygiene, medicines, vaccines and sister sectors, like water supply and sanitation, our job was much more straightforward," she said.
"But that job has changed, gradually over time and then dramatically within the past decade. I see a WHO that pursues excellence, an organisation that is effective, efficient, responsive, objective, transparent and accountable."
Dozens of health ministers and more than 1,800 delegates representing the 193-member body, part of the United Nations, gathered at the meeting that ends on May 24.
The WHO has previously said it expects a 300-million-dollar (212-million-euro) deficit this year due to plunging voluntary contributions. Most of the organisation's financing needs depends on such contributions.
The WHO subsequently cut its bi-annual budget for 2012-2013 by about one billion dollars and is expected to lay off 300 workers, about 12 percent of its workforce in Geneva.
"These are difficult times and the challenges keep getting more and more complex," Chan said, noting that she was "most especially" referring to the 2008 financial crisis.
"At WHO, we have been advised by external experts to accept the financial crisis, not as a temporary disruption to be managed with temporary measures, but as the start of a new and enduring era of economic austerity," she added.
"We have accepted this advice."
She explained the cost-saving measures introduced after the crisis hit have forced cut backs in the organisation's "traditional areas of work," and were made with "deep regret."
But, she made clear, the organisation is "most definitely not bankrupt."
Despite the ongoing financial pressures she said the international community cannot afford to neglect health spending.
"We cannot allow the loss of essential medicines, essential cures for many millions of people, to become the next global crisis," she said.
Swiss non-governmental organization Berne Declaration said: "To carry out its mission well, the WHO needs flexible and predictable financing."
American millionaire-turned-philanthropist Bill Gates is expected to give a speech on Tuesday related to the organisation's funding.
Meanwhile Taiwan's Health Minister Wen-Ta Chiu said Monday he had sent a letter to the WHO urging it to stop calling Taiwan part of China.
"My country is baffled by learning recently that WHO used the outdated 'Taiwan Province of China' to refer to Taiwan" in an internal document, he told AFP on the sidelines.
"We call on the WHO to adopt a fair, sensible, reasonable, and farsighted attitude, and stop using the false terms 'Taiwan Province of China' or 'Taiwan, China," he said.
"This erroneous terminology is not only disrespectful to Taiwan, but also created confusion and misunderstanding to the staff in the WHO."
China and the United Nations have not recognised the island as a separate nation. Beijing has occupied Taipei's seat in the UN General Assembly since 1971.
In 2009, the WHO invited Taiwan to participate as an observer under the name 'Chinese Taipei.'
Last week Taiwan's President Ma Ying-jeou protested to China for allegedly pressuring the World Health Organisation into telling its officials to refer to the island as a Chinese province.
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