A sharp reduction in various spending items that do not affect basic services, and a budget that is 5.8% smaller compared to the 2025 budget.
The budget deficit could reach approximately 70% if the occupation continues to withhold clearance funds.
Emergency spending and urgent response allocations increased to 516 million shekels to deal with emergencies.
Measures to boost local revenues without impacting low-income groups
Government support for water, electricity, fuel, camps, and health insurance services amounted to 1.3 billion shekels.
Social protection allocations for 2026 amount to approximately 1.2 billion shekels across various official institutions.
Additional measures to reduce the payroll during 2026, based on what was achieved last year by reducing approximately 120 million shekels and adopting a zero hiring policy.
Settlements with local authorities and electricity and water companies will be completed during 2026 after successfully controlling more than half of them during the past year.
The focus will be on completing only essential development projects and increasing external support to reach a total of 880 million shekels.
Ramallah, March 17, 2026 (WAFA) – The Cabinet, in its weekly meeting on Tuesday, approved the draft budget for 2026, to be submitted to the President of the State of Palestine, Mahmoud Abbas, for approval in accordance with the proper procedures.
The emergency budget responds to the complex political, economic and social reality, with the likelihood that the Israeli government will continue to withhold clearance funds. In light of this, available cash flows will be directed to basic services, primarily health, education, security and social protection, while at the same time continuing to disburse a percentage of public sector employees’ salaries according to available resources.
The draft budget also takes into account the possibility of the continuation of the financial blockade and Israeli measures, which prompted the government to adopt a strict austerity approach to managing resources and controlling spending since 2025, with the aim of strengthening it during 2026 in order to control spending and ensure the continuity of providing basic services.
According to the draft budget, total revenues are expected to reach 15.7 billion shekels, including clearance revenues – if released – while expected expenditures will amount to around 17.6 billion shekels, a decrease of 5.8% compared to last year’s budget compared to 2025. If the occupation continues to withhold clearance funds, the budget deficit is expected to reach about 70%.
In addition, in light of preparing a budget responsive to emergency developments, the draft budget included raising the emergency and urgent response allocation from about 40 million shekels to 516 million to deal with emergencies.
According to the statement issued by the Government Communication Center, in light of the increased response to the complexities of the 2026 budget situation, the Ministry of Finance will intensify measures to enhance local revenues, without affecting low-income groups, in addition to a sharp reduction in various expenditure items that do not affect basic services, while continuing government support for water, electricity, fuel, camps and health insurance services, which amounts to about 1.3 billion shekels, with a serious review of this government support to ensure that it reaches the most needy groups.
In the same context, and in response to the difficult economic conditions, especially for low-income groups, social protection allocations for 2026 will be approximately 1.2 billion shekels across various official institutions, in addition to support resources being mobilized through donor agencies, and this also intersects with the emergency and general expenditure item included in the draft budget.
In addition, as part of the government’s steps and its reform program, a reduction in the payroll for 2025 of about 120 million shekels was achieved, while the government will complete additional measures for 2026 and a complete halt to new appointments. Significant progress was also made in making settlements with local authorities and electricity and water companies (the so-called net lending), which was controlled by more than half during the past year, and additional reform measures will continue during 2026.
In another context, the draft budget included a move towards completing the necessary development projects currently being implemented at a cost of 427 million shekels, in conjunction with strengthening the expected external support to bring the total to 880 million shekels in various sectors.
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Y.T
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