The Palestinian Authority (PA) "faces a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers", reported AFP.
The US "cut more than $500 million in Palestinian aid in the last year", while "the PA has decided to refuse what little US aid remains on offer for fear of civil suits under new legislation passed by Congress".
Israel, meanwhile, has "announced it intends to deduct around $10 million a month in taxes it collects for the PA in a dispute over payments to the families of prisoners in Israeli jails", in response to which, President Mahmoud Abbas "has refused to receive any funds at all".
According to AFP, Abbas' government will thus be left "with a monthly shortfall of around $190 million for the length of the crisis". On 10 March, the PA "announced a package of emergency measures…including halving the salaries of many civil servants".
If the economic situation remains so difficult and the PA is unable to pay salaries and provide services, in addition to continuing [Israeli] settlement expansion it will lead to an explosion
political analyst Jihad Harb told AFP.
Nasser Abdel Karim, a Ramallah-based economics professor, told AFP that such crises are "repeated and disappear according to the development of the relationship between the Palestinian Authority and Israel or the countries that support [the PA]."
"The problem is the lack of cash," economic journalist Jafar Sadaqa told AFP.
He said that while the PA had faced financial crises before, "this time is different because it comes as a cumulative result of political decisions taken by the United States."
Last year, the US State Department said Washington would "no longer commit funding" to the UNRWA.
The US had been UNRWA's largest contributor by far, providing it with $350 million annually — roughly a quarter of the agency's overall budget.
This came a month after reports emerged of a secret American report stated that there are only 40,000 Palestinian refugees, noting they are the Palestinians who left their home land in 1948 and remain alive today and not their descendants.
US President Donald Trump's senior advisor and son-in-law, Jared Kushner, is reported to have tried to pressure Jordan to strip more than two million Palestinians of refugee status in a move that aims to end the work of the United Nations Relief and Works Agency for Palestine Refugees (UNRWA).