UNRWA faces a $220 million deficit, forcing pay cuts and layoffs in Gaza as vital refugee services risk collapse amid frozen donor contributions and Israeli pressure.

The United Nations Agency for Palestinian Refugees (UNRWA), facing a $220 million dollars deficit in its 2026 budget, announced a 20% pay cut earlier this month for its local staff in Gaza, alongside reduced working hours and the termination of contracts for employees based outside the territory.

Commissioner-General Philippe Lazzarini explained in a letter to staff that the financial gap imperils the agency’s ability to fulfill its most basic obligations, from paying its workforce to sustaining critical humanitarian services for refugees.

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The financial shortfall comes amid a decline in international donations, particularly after several donor states froze their contributions following Israeli allegations against some of its employees.

UNRWA sustains essential services for Gaza’s Palestinian refugees -about 70% of the population- through education, healthcare, and social aid, serving as a crucial stabilizing force during repeated Zionist aggressions and border restrictions.

Tel Aviv’s regime has repeatedly accused the agency of leniency or complicity with Palestinian armed groups, yet has not presented verifiable evidence. UNRWA has consistently and forcefully rejected these allegations, emphasizing that it investigates and takes action against any staff member found to have engaged in misconduct.

In 2025, the Knesset (Israeli Parliament) passed legislation in 2025 to effectively ban the agency’s operations in territories it claims as part of “Israeli sovereignty”, such as occupied East Jerusalem, on claims that the agency represents a security threat. For its part, UNRWA dismissed the legislation as unlawful. The agency operates under international legal protections as a UN body.

Since October 2023, Israeli attacks in Gaza have killed more than 380 of the UN agency’s staff members, according to its records.

UN Secretary-General Antonio Guterres cautioned Prime Minister Benjamin Netanyahu that Israel’s failure to revoke laws targeting UNRWA and return its confiscated assets and property could lead to a case before the International Court of Justice (ICJ).

Amjad Shawa, Director of the Palestinian NGOs Network (PNGO) in Gaza, cautioned that undermining UNRWA advances an Israeli agenda to nullify Palestinian rights to return and compensation. “There is a war being waged against humanitarian work, including UNRWA, and we are paying the price for our commitment to international humanitarian law, a law the Israeli occupation refuses to uphold”, he stated.

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