The Palestinian Authority (PA) is experiencing an acute and accelerating fiscal crisis, rooted in longstanding structural constraints and aggravated by recent shocks. Clearance revenues collected by Israel (normally two-thirds of PA income) have become increasingly volatile, with deductions rising sharply since October 2023 and transfers suspended entirely since May 2025.

At the same time, the PA’s domestic tax base has eroded due to major income losses stemming from the broad contraction of key sectors in both the West Bank and the Gaza Strip, the suspension of permits for workers commuting to Israel and settlements, and movement restrictions in general.

These combined pressures have generated severe liquidity shortages and rising domestic borrowing, threatening the continuity of essential public services.

The health sector is particularly affected: reduced PA liquidity has delayed payments to providers, caused shortages of medicines and consumables, and disrupted referral pathways, especially for specialised treatments unavailable within the West Bank or Gaza. The East Jerusalem Hospitals (EJH) Network – providing oncology, kidney care, cardiac surgery and other life-saving services – faces acute operational strain as PA arrears have reached roughly EUR 90 million. The 2025 withdrawal of major donor support by USAID to EJH has further widened financing gaps, jeopardising the continuity of critical services for Palestinian patients.

Direct:  

• Six Palestinian hospitals in East Jerusalem (EJ).

• More  than 15,000 patients from the West Bank (WB)

Indirect:

• Key public institutions of the PA: Ministry of Finance (MoF), Ministry of Health (MoH).

Outcome 1: Enhanced Palestinian Authority’s institutional reform and financial stability 

Outcome 2: Maintained access to social services for all – women, girls, men and boys

Erwartete Resultate:  

Output 2.1: Eased financing for public social services, mainly in Social Protection and Health 

Indicator 2.1.2: Amount of funding made available through PEGASE to reduce debt burden on East Jerusalem Hospitals

Resultate von früheren Phasen:   In 2009, 2010, and 2011, Switzerland contributed to PEGASE’s Cash Transfer Programme (CTP), providing financial assistance to vulnerable communities.