The Palestinian Authority is taking significant steps to address its worsening financial crisis by promoting digital transactions as a way to reduce reliance on physical currency. This shift comes amid growing concerns about the limitations imposed by Israeli authorities on the flow of funds between Palestinian and Israeli banks. According to Deputy Governor of the Palestinian Monetary Authority (PMA), Mohammad Manasra, the move toward electronic payments is part of a broader strategy to stabilize the economy. He emphasized that this transition aims to create a more resilient financial system without imposing undue burdens on ordinary citizens.
The situation has been exacerbated by Israeli restrictions on the transfer of surplus cash, which limit Palestinian banks to returning only a fraction of their holdings through designated Israeli banks—Bank Hapoalim and Israel Discount Bank—with an annual cap of approximately NIS 18 billion. Palestinian economist Mohammed Samhouri has pointed out that this ceiling falls far short of what is required to sustain the economy, contributing to a severe financial crisis. The restrictions have led to an accumulation of shekels in Palestinian banks, reaching unsustainable levels and threatening the ability of these institutions to support trade with Israel, which remains a critical economic partner.
The Palestinian economy is deeply intertwined with Israel, particularly in terms of trade. In 2024, more than half of the Palestinian Authority’s imports and over 80% of its exports were directed to Israel. As a result, the inability to transfer sufficient funds has had a direct impact on the functioning of the banking system. Banks have reportedly started rejecting shekel deposits, leading to economic hardships for both individuals and businesses. To mitigate this, the PMA has introduced a new law aimed at reducing cash transactions and fostering a more robust financial environment. Implementation of this law is expected to take place over a two-year period, contingent upon the establishment of a fully integrated electronic payments infrastructure.
Efforts to increase the NIS 18 billion cap have been ongoing, with discussions held between the PMA, the Bank of Israel, and an international partner. However, responsibility for addressing the issue has shifted to the Israeli government since October 2023. The Israeli government has maintained that the restrictions are justified due to security concerns and alleged violations of Israeli laws by the Palestinian Authority.
Meanwhile, the financial strain has taken a toll on vital sectors, including healthcare. A recent strike by the Palestinian Medical Association has left numerous clinics and hospitals in the West Bank unable to operate effectively. Dr. Aid Qudami, a family physician in Qalqilya, has joined the strike, citing the inability to treat patients due to insufficient resources. The Palestinian Health Ministry is estimated to be in debt of around NIS 3.5 billion, severely impacting the availability of essential medicines, medical equipment, and even the payment of doctors' salaries. The crisis is partly attributed to the withholding of tax revenues by Israel, which collects levies at border crossings and ports on behalf of the PA. These withheld funds account for roughly 60% of the PA’s income, further compounding the financial challenges faced by the administration.
The situation has worsened in recent years, especially after the October 7, 2023, massacre, during which Israel began withholding funds intended for Gaza, including pensions for Gazan employees of the PA. These actions have been carried out under the direction of Israeli Finance Minister Bezalel Smotrich, who cited the PA’s alleged support for terrorism and activities against Israel as justification. The cumulative effect of these measures has led to significant budget cuts and service reductions, including in the healthcare sector.
As the financial crisis continues to deepen, the Palestinian Authority faces mounting pressure to implement reforms and secure alternative funding sources. The push for digital transactions represents one potential avenue for stabilizing the economy, although its success will depend on overcoming existing barriers and ensuring cooperation from Israeli authorities. The coming months will likely see increased efforts to negotiate changes to the financial restrictions, alongside continued calls for international support to alleviate the economic pressures facing the region.
2 reports
The Jerusalem PostIndependentCenterFactual 60Objective 757 days agoThe Palestinian Authority is pushing for increased reliance on electronic payments to address a financial crisis exacerbated by Israeli restrictions on cash transfers. Deputy Governor Mohammad Manasra of the Palestinian Monetary Authority stated that these restrictions limit Palestinian banks to transferring only up to NIS 18 billion annually through specific Israeli banks. Palestinian economist Mohammed Samhouri argues this cap is insufficient, contributing to economic instability. The situation has led to banks refusing to accept shekel deposits, causing hardship for individuals and businesses. Manasra emphasized that a new law aims to promote electronic transactions to strengthen the economy, not burden civilians, and plans for gradual implementation over two years. Discussions are ongoing with the Bank of Israel and an international partner to increase the transfer cap, although responsibility for the issue was shifted to the Israeli government in late 2023.
Bias read (Center): While the article discusses a politically sensitive issue involving Israeli-Palestinian relations, it presents information from multiple perspectives including Palestinian officials, economists, and external research organizations. The framing remains balanced, avoiding overtly positive or negative傾
Why these scores (Factual 60 · Objective 75): The article discusses a different topic—digital transactions and the Palestinian banking crisis—not the specific hospital suspension referenced in the primary source. It mentions the broader financial crisis but lacks direct connection to the hospital's actions. Some details about the banking system
The Times of IsraelIndependentProgressiveFactual 50Objective 607 days agoThe article reports on the deteriorating state of healthcare in the West Bank, citing a financial crisis within the Palestinian Health Ministry. Dr. Aid Qudami, a family physician in Qalqilya, has joined a strike by the Palestinian Medical Association due to severe funding shortfalls, leading to the closure of numerous clinics. The crisis stems from Israel withholding tax revenues that constitute around 60% of the Palestinian Authority's income, exacerbated by allegations of corruption and mismanagement. The situation has resulted in critical shortages of medicine, equipment, and staff, impacting both public health services and the livelihoods of healthcare professionals.
Bias read (Progressive): The article frames the financial crisis as a result of Israeli policies, particularly the withholding of tax revenues, which is portrayed as a deliberate act against the Palestinian Authority. While it presents facts about the financial strain on the health system, the emphasis on Israeli actions as
Why these scores (Factual 50 · Objective 60): The article inaccurately attributes the crisis to 'Israeli sanctions' and frames it as a strike by the Palestinian Medical Association, which is not mentioned in the primary source. It cites Physicians for Human Rights Israel but misrepresents the cause of the crisis and omits key details like the h
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