World Bank warns of PA’s economic collapse; Smotrich refuses to transfer funds

Smotrich: ‘The PA’s financial system is up to its neck in terror.’

By Vered Weiss, World Israel News

The World Bank warned Thursday that the Palestinian Authority’s financial situation has “dramatically worsened in the last three months” and is nearing collapse.

They noted the growing gap between the PA’s revenues and the amount needed to provide services is widening.

According to World Bank data, as of the end of 2023, this gap reached $682 million and is expected to double to $1.2 billion in the coming months.

The loss of 144,000 Palestinian jobs in Judea and Samaria, as well as the dismissal of 148,000 Palestinian workers in Israel since the beginning of the war on October 7th, has partly accounted for the widening of the gap.

In addition, Finance Minister Bezalel Smotrich said he would withhold tax revenues collected for the PA and would not extend a waiver that allows Israeli banks to work with Palestinian banks.

The Financial Times reports that the PA could undergo a financial collapse if the bank waiver allowing the transfer of funds to Palestinian banks isn’t extended by July 1st.

Smotrich has stated he has no intention to extend the waiver to Palestinian banks, saying that “The PA’s financial system is up to its neck in terror,” and wrote on X, “They back and fund terror.”

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Although Smotrich had considered a compromise solution to transfer tax funds for Palestinians through Norway to prevent them from falling into the hands of Hamas and other terror groups, the recent decision of Norway to unilaterally recognize a Palestinian State has threatened that proposal, and Smotrich has declared it null and void.

In a letter to Israeli Prime Minister Benjamin Netanyahu, Smotrich doubled down on his refusal to allow the transfer of funds as retaliation for the unilateral declaration of a Palestinian state by some countries and the ICC’s prosecutor seeking arrest warrants for Netanyahu and Defense Minister Yoav Gallant.

Smotrich wrote, “There’s urgency for an immediate response that will impose a significant cost on the Palestinian Authority for its actions and deter it and other countries,” Smotrich concluded.

However, Yoav Gallant urged Smotrich to transfer the funds to avoid unrest in Judea and Samaria that may result from a financial collapse.

Gallant said, “Stability in Judea and Samaria is always in Israel’s interest, and especially now.”

“It would be appropriate to immediately transfer the funds, which will be used for running the PA as well as the forces that help prevent terror and mass events,” he said.