The Shekel Surplus: A Persistent Crisis in the Palestinian Economy
The persistent accumulation of surplus shekel cash has emerged as one of the most pressing challenges facing the Palestinian banking sector and the Palestinian economy as a whole, constituting a chronic crisis since 2009. The Palestine Monetary Authority (PMA) has warned repeatedly that continued Israeli obstruction of cash repatriation carries serious repercussions for the ability of Palestinian banks to replenish their accounts with Israeli correspondent banks. These constraints impede trade finance and the settlement of payments to Israeli suppliers, thereby raising the prospect of acute shortages in essential goods and services such as fuel, electricity, and water. The banking sector also incurs substantial security and logistical costs associated with holding this surplus (IMF, 2022).
This paper examines the various dimensions of the shekel surplus crisis in three through three main analytical pillars The first identifies the principal sources and channels through which the surplus is generated. The second sets out the costs and burdens arising from its accumulation in the Palestinian banking system. The third reviews measures proposed by the PMA and other stakeholders to address the crisis and advance the transition toward electronic payment. Finally, the paper concludes with practical interventions for managing the crisis and mitigating its effects on the banking sector. The analysis draws on data from the PMA and the Palestinian Central Bureau of Statistics (PCBS), together with local and international commentary on the surplus crisis.