PFRD Review : April - June 2025

Overview & Synopsis

Public finances were further squeezed in the first half of 2025, due to economic volatility and the impact of Israeli policy on revenues. Clearance revenues, the Palestinian Authority’s (PA) main source of income, continued to undergo significant deductions by Israel in 2025. These monthly deductions averaged more than NIS460 million in the first half of the year, compared to about NIS200 million prior to October 2023. Since May 2025, the transfer of clearance revenues has been completely halted. As of the drafting date of this report,2 May, June, July, August and September 2025 clearance revenues are yet to be transferred to the PA, leaving it struggling to make ends meet. On a commitment basis, clearance revenues earned actually increased by 16 percent in the first half of 2025, year on year (y/y), due to an increase in imports.3 On the domestic side, tax collections dropped by 17 percent in the first half of 2025, as almost all major tax categories witnessed a decline given the economic volatility in the West Bank. In contrast, non-tax revenue increased by 34 percent due to the yearly license fee paid by the telecommunications companies in June 2025 and higher investment profits from the Palestine Investment Fund (PIF) compared to the first half of 2024. The increase was, however, not enough to offset the strong decline in domestic tax revenue, resulting in an overall drop in domestic collections.