Palestinian FM warns PA faces ‘existential’ crisis as Israel withholds tax revenues

The Palestinian Authority is facing a deepening financial crisis that now threatens its ability to function, the Palestinian finance minister warned on Thursday, describing the situation as “very dangerous” and potentially destabilising for basic public services.

Speaking at a press conference in Ramallah, Finance Minister Astephan Salameh said the PA has gone nearly ten months without receiving tax revenues collected on its behalf, funds that make up the backbone of its budget. He said Israel is currently withholding roughly $4.4 billion in Palestinian tax income.

Under existing agreements, Israel collects customs duties and taxes on goods bound for PA-administered territories and is required to transfer the funds to the Palestinian Authority. However, Israel has frozen or deducted portions of those revenues, citing legislation designed to offset payments the PA has made to the families of Palestinians imprisoned for security-related offenses. In 2025, the PA revised its system for distributing such aid, shifting from criteria based on length of imprisonment to socio-economic need.

Salameh said the withheld funds account for close to 70% of the PA’s public income, leaving the government with few alternatives. “There is no substitute for this revenue. Without it, we cannot survive,” he said, calling the crisis “existential rather than temporary.”

He added that Palestinian institutions are now operating far below minimum capacity, with severe strain on health care, education, and security services. Even to sustain this reduced level of activity, the PA would require about one billion shekels per month, he said.

According to Salameh, if the tax revenues had been transferred as agreed, the PA’s 2025 budget deficit could have been kept below 400 million shekels. Instead, he warned, the shortfall is expected to exceed 4.5 billion shekels, further deepening the authority’s financial vulnerability.