31/05/2026
⚠️ : Banks on the Edge—$22 Billion in Deposits at Risk as Salary Cuts Trigger Defaults
Palestine’s banking sector is walking a tightrope. With $22B in deposits but a 68% loan-to-deposit ratio, banks are dangerously exposed—especially since 116,000 public-sector borrowers depend on their salaries to repay loans. But those salaries? Slashed to 2,000 shekels in January 2026, a fraction of what’s needed.
The Monetary Authority has scrambled to prevent collapse, ordering banks to:
Limit automatic deductions for partial salaries
Postpone loan repayments to avoid mass defaults Yet these are temporary fixes for a systemic problem. The real issue? $2.5B in unpaid public-sector salaries, $1.65B owed to private businesses (hospitals, pharmacies), and $4.5B in pension fund arrears. Every delayed payment ripples through the economy, crippling healthcare, trade, and household spending.
Worse still, international aid plunged 20% in 2026 to just NIS 2.55B, as donors impose stricter conditions. Without a lifeline, the banking system—and the economy—could unravel completely.
👉 Can Palestine’s banks survive this storm? https://bit.ly/4tfVnCF
The structure of public revenues remains highly unbalanced, with a significant reliance on compensation funds, which represent approximately 68% of the
