Palestinian finances are on the brink of ruin after the suspension of hundreds of millions of dollars of US aid, the head of the Palestine Monetary Authority (PMA) said on Tuesday.
The mounting financial pressures on the Palestinians’ self-ruling entity have sent its debt soaring to $3 billion, and led to a severe contraction in its estimated $13 billion GDP economy for the first time in years, Azzam Shawwa told Reuters.
“We are now going through a critical point,” Shawwa said with respect to Palestinian President Mahmoud Abbas’s Western-backed Authority, which exercises limited self-government in the Israeli-occupied West Bank.
The head of the PMA, the Palestinians’ equivalent of a central bank said:
What’s next, we don’t know. How we are going to pay salaries next month? How are we going to finance our obligations? How will daily life continue without liquidity in the hands of people?
“I don’t know where we are heading. This uncertainty makes it difficult to plan for tomorrow,” Shawwa said during a visit to neighbouring Jordan.
The steep cuts in US aid over the past year were widely seen as an attempt to pressure the Palestinian Authority (PA) back to the negotiating table after it cut off political dealings with the Trump administration in 2017.
That move followed President Donald Trump’s decision to recognise Jerusalem as the capital of Israel, and to move the American embassy to the city despite its internationally disputed status, reversing decades of US policy and practice.
The White House is eager for Palestinians to engage with a long-delayed Middle East peace plan drawn up by Trump’s son-in-law Jared Kushner.
The plan’s economic component is due to be unveiled at a conference in Bahrain next week, which the Palestinians are boycotting, citing pro-Israel bias by Washington.