Palestinian Authority may face stifling financial crisis: official

A senior official said on Sunday that the Palestinian Authority may face a stifling financial crisis over the next six months.

Estephan Salameh, an advisor to the Palestinian prime minister for planning and aid coordination told reporters in Ramallah that the financial crisis wasa result of the suspension of international aid to the Palestinian treasury as well as continued Israeli withholding of Palestinian tax revenues.

"Unfortunately, the government is facing a deepening crisis and needs exceptional support to provide basic services to the Palestinians without a decline in the quality of services, including the payment of employee salaries," he said.

He said he expected that the European Union would provide 600 million euros to the Palestinian treasury by March 2022, stressing that the Palestinian government is making significant efforts to meet all its financial obligations.

The World Bank has previously warned that the Palestinian government may not fulfill its obligations by the end of this year unless donors resume aid and Israel stops withholding tax revenue and responds to outstanding financial issues.

The World Bank presented a report to the Committee for the Coordination of International Aid to the Palestinian People at a meeting in Oslo last week.

The report confirmed that the PA's public finances still face "severe challenges despite increasing public finance revenues".

Palestinian officials recently complained that the financial aid received by the Palestinian treasury until the end of 2021 was only 10 percent of what had been received in previous years. They said no financial assistance had arrived from Arab countries in 2020 and 2021

On Thursday, a UN report issued by the Office of the United Nations Special Coordinator for the Middle East Peace Process, Tor Wennesland, described the economic and financial situation in the Palestinian territories as "terrible."

The report warned against a piecemeal approach to addressing current political, economic and security challenges, which risk only perpetuating an ongoing crisis management cycle, calling for managing the ongoing economic and financial crisis facing the Palestinian Authority.