Palestinian Fund for Reconstruction and Development (PFRD) Review : July - September 2025

Overview & Synopsis

The Palestinian Authority (PA) has been facing a deep fiscal crisis in recent months due to the absence of clearance revenues. These revenues, the PA’s main source of income, continued to undergo significant deductions by Israel in 2025, with monthly deductions more than doubling since October 2023, purportedly to offset the PA’s spending in Gaza. Since May 2025, the transfer of clearance revenues has been completely halted, and as of the drafting date of this report, clearance revenues for the months of May to October 2025 are yet to be transferred, leaving the PA struggling to make ends meet. On a commitment basis, clearance revenues earned actually increased by 6 percent in the first nine months of 2025 year-on-year due to an increase in imports from a low base. On the domestic side, tax collections dropped by 6 percent during the same period as almost all major tax categories declined amid economic volatility in the West Bank. In contrast, non-tax revenue increased by 23 percent, driven by the yearly license fee paid by telecommunications companies in June 2025 and higher investment profits from the Palestine Investment Fund (PIF) compared to the first nine months of 2024.