AMMAN (Reuters) - Jordan warned on Wednesday that a severe financial shortfall facing a United Nations agency that helps Palestinian refugees could have a “catastrophic” impact on the lives of millions of refugees in the region.

FILE PHOTO - Jordanian Foreign Minister Ayman Safadi speaks during a meeting with his Russian counterpart Sergei Lavrov in Moscow, Russia July 4, 2018. REUTERS/Sergei Karpukhin

Foreign Minister Ayman Safadi said after meeting visiting U.N. Relief and Works Agency (UNRWA) Commissioner-General Pierre Krähenbühl the budget crisis facing the agency could deprive refugees of core education, healthcare and food security service that would only “deepen their humanitarian plight”.

“UNRWA faces a dangerous financial deficit that threatens catastrophic consequences on refugees if it is not covered before its financial allocations run out,” Safadi was quoted as saying in a foreign ministry statement.

UNRWA has faced a cash crisis since the United States, long its biggest donor, slashed funding to the agency, providing just $60 million of a promised $365 million this year.

U.S. President Donald Trump withheld the aid after questioning its value and saying Washington would only provide more assistance if the Palestinians agreed to renew peace talks with Israel.

The largest ever reduction in UNRWA’s funding has cast doubts about the agency’s’ long term outlook and has already begun to impact some services. U.N. officials have said it could even affect the opening of schools at the start of the next academic year.

The agency operates around 700 schools, educating 500,000 refugee children in Gaza, the West Bank, Lebanon, Syria and Jordan.

Jordan, which hosts the largest number of Palestinian refugees in the Middle East outside Palestinian territories, was engaged in intensive lobbying with donors, Safadi said.

Officials privately have said they were was also worried about any U.S. drive to dismantle the agency as part of a nascent Middle East peace plan that Washington has promised to unveil soon

According to diplomats, the plan diverges from longstanding U.S. support for a Palestinian state and backing for a full Israeli withdrawal from territory captured in 1967.

“Jordan warns of the danger of touching the role of the UNRWA that should continue to provide its services under its international mandate,” the foreign ministry statement said.

Safadi said the international community must continue to shoulder its political and moral responsibilities toward Palestinian refugees under U.N. Security Council resolutions that maintain their right of return and compensation.

Among several disputes deadlocking Middle East peace talks has been a demand that as many as 5 million Palestinians be granted the right to return to lands in Israel that they or their kin lost

Founded in 1949, UNRWA serves Palestinian refugees in the Israeli-occupied West Bank, in Gaza, Syria, Lebanon and Jordan. It is funded mainly by voluntary contributions from U.N. member states.