The European Union has announced a €43 million contribution to support the Palestinian Authority in covering salaries and pensions for its employees and retirees in the occupied West Bank.

This funding, according to the EU, aims to help the Palestinian Authority meet its financial obligations to civil servants, who are grappling with severe financial hardships due to a prolonged economic crisis in the occupied Palestinian territories. The situation has been further exacerbated by irregular Palestinian tax clearance payments and continued deductions imposed by the Israeli occupation.

The EU emphasized that the €43 million forms part of an emergency short-term financial support package, specifically designed to address the immediate financial needs of the Palestinian Authority. This assistance is targeted primarily at civil service employees, with a focus on those working in the health and education sectors in the West Bank, as well as retirees.

The EU's deputy representative, Maria Velasco, highlighted the Union's continued commitment to making significant contributions to the Palestinian Authority’s budget, especially during crucial periods.

She said, "The EU continues to provide significant support to help pay salaries for government employees and retirees. We support Palestinian teachers, health workers, and social workers who are crucial to education, health, and social services. Our contributions to government salaries and pensions reaffirm our commitment to the efforts in building a Palestinian state."

The EU also called on "Israel" to cease withholding Palestinian tax revenues and to fulfill its obligations under current agreements. Additionally, it urged Tel Aviv to take prompt action to improve the worsening economic situation in the occupied territories, including lifting restrictions on Palestinian labor access.

Yesterday, Israeli occupation Finance Minister Bezalel Smotrich directed the withholding of 100 million shekels ($26 million) in tax funds intended for the Palestinian Authority, stating that the money will be allocated to compensate what he calls Israeli "victims of terrorism."

In a statement released late Sunday, the Israeli Finance Ministry claimed the move was "part of measures to combat terrorism."

Smotrich accused the Palestinian Authority, which administers parts of the Israeli-occupied West Bank, of transferring the funds to the "families of terrorists," referring to Palestinians killed or detained at the hands of occupation forces for carrying out Resistance operations.

The Finance Ministry's statement noted that this was the fifth instance of withholding funds, which "Israel" collects on behalf of the Palestinian Authority.

World Bank warns: Palestinian Authority on brink of fiscal collapse

Back in May, the World Bank reported that the Palestinian Authority was at risk of financial collapse, citing dwindling revenue streams and a sharp decline in economic activity amid the ongoing Israeli genocide against Palestinians in Gaza.
 
"The fiscal situation of the Palestinian Authority has dramatically worsened in the last three months, significantly raising the risk of a fiscal collapse," the World Bank said in a statement. 

"Revenue streams have largely dried up due to the drastic reduction in clearance revenue transfers payable to the Palestinian Authority and a massive drop in economic activity," it added.

At the time, the report detailed that the authority's deficit is projected to hit $1.2 billion, doubling the $682 million funding gap recorded at the end of 2023 in the next few months.

Furthermore, it stressed that the Palestinian economy is expected to shrink by 6.5 to 9.6 percent, though the Bank emphasized that the forecast is "highly uncertain."

"Increased foreign assistance and the accumulation of further arrears to public employees and suppliers are the only available financing options for the Palestinian Authority," the World Bank said. 

Since October 2023, nearly half a million jobs in the Palestinian economy have disappeared, as reported by the World Bank.

This includes approximately 200,000 job losses in the Gaza Strip and nearly 150,000 job losses in "Israel" among individuals residing in the West Bank.

Poverty levels have risen, with the World Bank stating that currently, almost every resident of Gaza lives below the poverty line.

Read next: After Gaza, how 'Israel' is choking the economy in the West Bank