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A Palestinian official said on Wednesday that the Palestinian Authority (PA) intends to cut its employees' salaries in order to reduce costs.

Amjad Ghanem, the cabinet's secretary-general, told reporters in Ramallah that the PA is undergoing financial hardships due to Israel's deductions from its tax revenues, and the lack of support from Arab and friendly countries.

He added that the PA would deduct "a small amount" from the salaries to fulfill its obligations towards all parties, including the employees themselves, the least fortunate families, the private sector, medical supplies and transfers. Ghanem explained that the cuts may start from December  .

The cabinet's secretary-general revealed that the PA has reportedly received promises of financial aid from "Arab and friendly countries". He expressed his confidence that the current financial crisis would be overcome in the coming months.

On Tuesday night the Palestinian government held an emergency meeting in Ramallah to discuss the financial crisis ahead of the International Aid Coordination Committee for the Palestinian People summit scheduled in Oslo next week. Prime Minister Mohammed Shtayyeh (also Ishtayeh) will head the Palestinian delegation in Norway.

During the cabinet meeting, Palestinian officials ascribed the financial crisis to the Israeli deductions from Palestinian tax revenues. These were said to weaken the ministries' ability to cover operating expenses and fulfill their obligations towards service providers.

According to the bilateral economic treaties signed between Israel and the PA in the 1990s, Tel Aviv collects taxes on behalf of the Palestinians on goods traded to the Occupied Palestinian Territories through Israeli-controlled crossings.

Since then, Israel has been transferring tax revenues to the PA treasury every month. The annual tax revenues that Israel collects from Palestinian trade are estimated to exceed 1 billion US dollars.

Israeli deductions are however estimated to total 63.5 million US dollars every year. Tel Aviv justifies these cuts by accusing the PA of disbursing salaries to the families of Palestinians involved in anti-Israeli activities. It also deducts the costs of oil and power supplies, in addition to other services.

According to official data, taxes constitute about 60 percent of the PA revenues. These are in sharp decline as a result of the suspension of economic activities due to the Covid-19 pandemic.