Rhino: Agencies – The European Commission said on Friday it will provide the Palestinian Authority (PA) with 400 million euros ($435.5 million) in emergency financial assistance amid fears within the EU that the PA could collapse.

The funds will be disbursed in three instalments in the form of grants and loans between July and September, depending on progress in implementing the PA’s reform agenda, the Commission said in a statement.

The Commission had earlier signed a letter of intent with the PA outlining a strategy to address its financial and budgetary situation.

The PA’s public finances have been in crisis for years after donor countries reduced their funding, which previously covered about a third of its $6 billion annual budget, while demanding that the PA undertake reforms to address financial corruption and wasteful spending.

But Palestinian officials say the situation worsened sharply following the attack by Hamas militants on southern Israel on 7 October, which prompted Israel to withhold tax revenues, the PA’s main source of funding.