Economy & Aid
Donor aid to Palestinians rose while money reaching the treasury collapsed
Graphic: Times of Palestine
Original Reporting
Two official ledgers describe the same year in figures that differ by a factor of four.
The OECD's Development Assistance Committee, in its preliminary summary of 2023 aid levels, put net official development assistance for the West Bank and Gaza at $1.4 billion, a 12 per cent increase on 2022, of which $758 million was humanitarian aid — a 91 per cent rise in a single year.
UNCTAD, reporting to the UN Trade and Development Board in July 2024 on the basis of Palestinian fiscal data, recorded total donor aid to the Palestinian government in 2023 at $358 million, equal to 2 per cent of GDP, of which $206 million was budget support.
The two numbers are not in conflict. They measure different things. The OECD figure counts what donors spent on Palestinians, including money disbursed by their own agencies and implementing partners. The UNCTAD figure counts what arrived as government revenue. The distance between them is the shift in mechanism that has taken place since 2013.
The Secretary-General's report on assistance to the Palestinian people, issued in May 2024, states that donor budget support stood at nearly $1.4 billion in 2013, when it financed a third of total Palestinian Authority expenditure, and has since fallen by more than 80 per cent.
UNCTAD's earlier reports track the descent. In 2019, donor support was $590 million against a fiscal deficit of $1.4 billion, leaving a financing gap of $800 million. In 2022, the government received $250 million in budget support and $300 million for development projects. UNCTAD's 2024 report states that budget support had begun to decline by 2013 and that by 2021 it made up roughly 9 per cent of total assistance.
Sources differ on the starting point. UNCTAD has described total aid as $2 billion, or 27 per cent of GDP, in 2008; its 2020 report put donor budget support alone at 32 per cent of GDP that year. The World Bank's Public Expenditure Review of the Palestinian Authority, published in June 2025, uses the 27 per cent figure and records aid falling to 2 per cent of GDP in 2023, rising to 6 per cent in 2024, and adds that it is not guaranteed this level will be maintained.
What replaced budget support is spending the donor controls to the point of delivery.
The European Union describes itself as the largest external provider, with indicatively almost €1.2 billion for 2021-2024 under the European Joint Strategy, of which over €890 million had been adopted. In July 2024 the Commission announced a €400 million emergency package for the Palestinian Authority, disbursed between July 2024 and February 2025. The composition of the first instalment is on the record: of €150 million released on 31 July 2024, €58 million was grants through the PEGASE mechanism for salaries, pensions and vulnerable families, while €92 million was credit from the European Investment Bank.
PEGASE is a donor-run payment channel, not a transfer to the treasury. The Commission states that the mechanism already provides for a strong system of control of all beneficiaries based on ex-ante and ex-post checks. Commission financing documents show how the money is apportioned: in 2016, of €168 million paid through PEGASE direct financial support, €115 million went to salaries and pensions, €40 million to allowances for poor families and €13 million to arrears for medical referrals to East Jerusalem hospitals. The European Court of Auditors recorded in its Special Report 14/2013 that all beneficiaries are screened against sanctions and other lists using commercial screening software, and that an international organisation is contracted to host and manage the process.
That 2013 audit found the Commission and the European External Action Service had implemented the support in difficult circumstances, but questioned the sustainability of the mechanism and recommended conditionality tied to civil service and public finance reform. Answering a parliamentary question in 2024, the Commission acknowledged that the Court's reports on Palestine highlight structural weaknesses and the inadequacy of its procedures, programming framework and management system. The Commission has since agreed a reform matrix with the Palestinian Authority in November 2024, to which disbursements under a multiannual programme worth up to €1.6 billion for 2025-2027 are linked.
American assistance stopped passing through Palestinian public accounts earlier. The US Government Accountability Office reported that USAID spent $487.3 million of $540.4 million in Economic Support Fund assistance in fiscal years 2015 and 2016, that $230.1 million allocated for fiscal 2017 was reprogrammed to other purposes, that no funds were allocated for fiscal 2018 and 2019, and that the Palestinian Authority announced in December 2018 it would not accept assistance after 31 January 2019 because of the Anti-Terrorism Clarification Act.
How much of the remainder is consumed inside donor countries is not published for the West Bank and Gaza. The OECD flags its 2023 estimate as preliminary and partial, and excludes UNRWA core operations from it. The DAC does publish the equivalent global figure for one category: $31 billion of members' 2023 aid, 13.8 per cent of the total, was spent on refugee costs inside donor countries.
What is documented is that the residual channels are now the main ones. The Secretary-General's 2025 report records the 2024 flash appeal for the occupied Palestinian territory at $2.8 billion, funded to $2.55 billion or 74 per cent, and the 2025 appeal at $4 billion against identified needs above $6.6 billion, funded at less than 5 per cent as of 31 March. It also records UNRWA facing a $357.9 million gap, 42.1 per cent of its 2024 forecast, after donors suspended funding over allegations concerning 12 staff, allegations that were referred for independent investigation and followed by a completed review of the agency's neutrality mechanisms.
The World Bank continues to move money by grant to specific services rather than to the budget: a project document dated April 2025 sought a fourth additional financing grant of $103.3 million under the Palestinian Emergency Financing Facility to maintain education and health delivery.
Saudi support has been routed through a third institution. The Saudi Press Agency reported that the Arab Monetary Fund and the Palestinian government signed a letter of intent in Washington in October 2024, under the auspices of the Saudi finance ministry, setting out governance arrangements and accompanying economic reforms for the Saudi financial support programme.
Meanwhile the revenue base has been cut from the other side. UNCTAD reported Israeli deductions and withholdings from Palestinian revenues exceeding $1.4 billion between 2019 and April 2024, equal to 8.1 per cent of 2023 GDP. The Palestine Monetary Authority's quarterly fiscal report for the second quarter of 2024, drawing on finance ministry monthly data, described an unprecedented drop in transferred clearance revenue and new arrears accumulating as a result.
The World Bank's April 2025 project document estimates the Palestinian Authority's 2025 fiscal deficit at 9 per cent of GDP and states that clearance revenues have shrunk by over 50 per cent, with civil service salaries paid at an average of 70 per cent since October 2023. The 2024 Secretary-General's report put accumulated Palestinian Authority debt above $9 billion.
Whether the EU's €1.6 billion programme disburses at scale depends on tranche-by-tranche assessments against the reform matrix, which the Commission has not published in disbursement-level detail. At the Palestine Donor Group in November 2025, the EU said it had signed more than €82 million in new member state contributions through PEGASE, with more than €88 million pledged over the year — a fraction of the 2013 budget support level. The OECD, meanwhile, reports that global official development assistance fell 23.1 per cent in 2025, its largest annual contraction on record.
