UNRWA chief says cash flow crisis may force him into 'unprecedented decision'

GENEVA (Reuters) -The head of the U.N. Palestinian refugee agency said on Tuesday he may have to take an "unprecedented decision" about the services it provides if funding is not found soon to ease a cash flow crisis.

Philippe Lazzarini said the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) faced a $200 million deficit.

"Cash flow is managed on a weekly basis," he told reporters in Berlin. "Without additional funding I will soon have to take an unprecedented decision affecting our services to Palestinian refugees."

Lazzarini gave no further details of what that decision might entail.

The United States was UNRWA's biggest donor but President Donald Trump announced broad cuts in foreign aid, including to UNRWA, earlier this year.

Other Western governments' aid budgets are also under pressure following calls by Trump for more spending on defence as Russia's war in Ukraine drags on.

UNRWA provides aid, health and education services to millions in the Palestinian territories and neighbouring Arab countries of Syria, Lebanon and Jordan.

Lazzarini said that two weeks ago he had been about to suspend 10,000-15,000 UNRWA staff in the region because of the cash flow crisis but an advance contribution from a donor had given the agency respite for the next two months.

"Just to process the payroll of our staff we need $60 million a month. We have no visibility anymore beyond September," he added.

United Nations Secretary-General Antonio Guterres has requested a strategic assessment of the impact of the UNRWA mandate and will propose how the right of Palestinian refugees can be protected, Lazzarini said.

Israel has banned UNRWA from operating on its territory, accusing it of employing members of Palestinian militant group Hamas who took part in the October 2023 attacks on Israel that led to the war in Gaza.

UNRWA said as the ban went into effect this year that operations in the Gaza Strip and West Bank would also suffer.

The U.N. has said it will investigate all accusations made by Israel and asked Israel for evidence, which it says has not been forthcoming. Lazzarini has said that UNRWA has been the target of a disinformation campaign.

(Reporting by Olivia Le Poidevin, Editing by Miranda Murray and Timothy Heritage)