RAMALLAH, January 12, 2025 (WAFA) – The Palestinian Ministry of Finance announced today that it continues to navigate a severe financial crisis caused by Israel’s ongoing deductions from the Palestinian clearance revenues, which have risen to approximately 70% of the total revenues since the beginning of 2025.
Under signed agreements, Israel collects clearance revenues on behalf of the Palestinian Authority. These revenues consist of taxes and customs duties levied on goods imported through Israeli-controlled crossings and destined to the West Bank and the Gaza Strip.
These clearance revenues constitute a significant portion of the Palestinian Authority’s budget. However, Israel has frequently used them as a political tool, deducting amounts to offset debts or imposing deductions as punitive measures in response to Palestinian political actions, such as payments to the families of prisoners and martyrs.
Compounding the situation, local revenues have significantly declined following the ongoing Israeli aggression on Gaza.
In a statement issued Sunday, the ministry emphasized that the government, under directives from President Mahmoud Abbas, remains committed to mobilizing all possible financial resources to meet its obligations. These include salaries for public employees, allowances for various sectors, payments to suppliers and the private sector, and operational costs for hospitals and educational institutions.
The ministry revealed that recent agreements have been reached to release a portion of Palestinian funds held in a special account in Norway since January 21, 2024. These funds, amounting to approximately 1.5 billion shekels ($420 million), were withheld as a punitive measure linked to the government’s financial support for Gaza.
Additionally, 2.1 billion shekels remain withheld by Israel, bringing the total withheld funds to over 3.6 billion shekels as of 2024.
Israel began deducting an average of 275 million shekels monthly from clearance revenues in October 2023, equivalent to the government’s monthly allocations for Gaza. This has exacerbated the financial crisis, as the government continues to transfer these allocations directly to the accounts of public servants in Gaza.
The ministry outlined the main principles of the recent agreements, which include utilizing 767 million shekels of the Norwegian-held funds to pay Israeli fuel companies for weekly fuel purchases over the coming months. A similar amount will be used to settle electricity-related debts owed by Palestinian distribution companies to the Israeli Electric Corporation (IEC).
Regarding the funds withheld by Israel over the payments for Gaza, the government stated it is working with international partners to secure the release of these funds as soon as possible. If these agreements are implemented, the availability of liquidity would significantly enhance the government’s ability to meet its operational expenses and commitments in the coming period.
The statement highlighted that Israeli deductions from clearance revenues for electricity-related debts reached a record 1.6 billion shekels ($446 million) in 2024. Since 2012, annual deductions for electricity debts have totaled approximately 12.5 billion shekels ($3.5 billion).
Recognizing its responsibility during this critical time, said the ministry, the government has initiated the settlement of debts owed by Palestinian distribution companies and local councils to the IEC. It has also implemented measures to ensure monthly payments for electricity purchases, aiming to eliminate further deductions and enhance the government’s financial stability.
The ministry reaffirmed its commitment to addressing the financial crisis and ensuring the fulfillment of its obligations to the Palestinian people.
M.N
