The European Commission and the Palestinian Authority have signed a letter of intent setting out a strategy to address the critical fiscal and budgetary situation of the Authority and the Palestinian economy, the European Commission announced on Friday 19 July.
The EU is committed to providing short-term emergency financial assistance of €400 million to the Palestinian Authority to meet its most urgent financial needs and support its reform programme. This support, in the form of grants and loans, will be disbursed in three payments between July and September 2024, “subject to progress in the implementation of the reform agenda of the Palestinian Authority”, said the Commission in a press release.
The Palestinian Authority’s reform strategy aims to ensure budgetary sustainability, while modernising the Palestinian administration and its governance, combatting corruption, advancing the rule of law and transparency, reforming the social security and education systems, improving the business environment, and strengthening the foundations of a market-based economy, according to the Commission.
The short-term financial support will pave the way for a Comprehensive Programme for Palestinian Recovery and Resilience. Believing that funds from other donors will be needed, the European Commission has proposed creating a donor coordination platform for Palestine from autumn 2024 until the end of 2026.
It should present a legislative proposal for this programme at the beginning of September so that payments can begin before the end of the year, provided the conditions are met.
The multiannual aid programme, conditional on the implementation of the reform programme, should enable the Palestinian Authority to reach budgetary equilibrium by 2026 and ensure its long-term financial sustainability thereafter, according to the European Commission. It also aims to improving economic and financial relations between Israel and the Palestinian Authority, including regular payments of the clearance tax revenues due to the Palestinian Authority and the removal of access restrictions on Palestinian workers, said the Commission in its press release. (Original version in French by Camille-Cerise Gessant)