Palestine Economic Update
Palestine Economic Update - March 2026
author: Palestine Economic Policy Research Institute - MAS
year: 2026
Key Messages :
- The 2026 draft emergency budget projects ILS 15.7bn in revenues and ILS 17.6bn in expenditures, but continued clearance revenue withholding is expected to push the effective deficit to around ILS 11.9bn (about 70% of expenditures and 19% of GDP), prompting strict austerity, spending cuts, and increased reliance on arrears.
- A new decree-law, set to take effect within six months, caps cash transactions at ILS 30,000 to promote digital payments amid banking sector pressures, while parallel external proposals for a Gaza digital currency raise concerns about institutional fragmentation and financial control, undermining the role of the PMA.
- A new cycle of municipal development funding allocates €40m in performance-based financing to 138 municipalities to enhance service delivery and local government responsiveness.
- Amid a deepening economic collapse in the West Bank, agriculture has become a critical buffer for livelihoods but faces escalating pressures.