Israeli currency (illustrative)
Israeli currency (illustrative) Israel news photo: Flash 90

The Palestinian Authority’s deputy prime minister for economic affairs said Tuesday that the financial crisis is getting worse, as the new PA cabinet met for the first time.

"There is a major financial crisis and the PA is $4.2 billion in internal and external debt," Muhammad Mustafa said during a news conference following the cabinet meeting, according to the Bethlehem-based Ma’an news agency.

"We will start looking for sources of financial funds and will examine spending and collect taxes to pay our debts on time," he added.

The PA official also warned of a growing job crisis, with over 250,000 PA Arab citizens currently unemployed, young people particularly affected.

"The government will work hard to create jobs, especially for the youth sector through the launching of new projects," he said, according to Ma’an.

The PA owes $600 million to banks and $1 billion to international financial institutions, Mustafa said, adding that the new cabinet is working on a three year plan, starting with a 100-day short-term strategy.

The PA has complained of a financial crisis, the worse in its history, with its former Prime Minister Salam Fayyad having warned the entity may fail and cease to exist. At the same time the PA has continued to provide huge monthly salaries to terrorists serving time in Israeli prisons.

The Arab League states have pledged to pay the PA $100 million a month in a “safety net”. Saudi Arabia has indicated that it will contribute $20 million each month to the PA.

In March, the International Monetary Fund (IMF) called on Israel and the PA to help support the economy of Gaza and the PA-assigned areas of Judea and Samaria, where growth has been slowing and unemployment is rising.

“Urgent actions are needed -- by the Palestinian Authority, by the government of Israel and by donors -- to stabilize the fiscal position and rekindle economic growth over time,” said the IMF.

As part of his efforts to lure the PA back to the negotiating table with Israel, U.S. Secretary of State John Kerry introduced a $4 billion plan to boost the entity’s economy through private investment.

Kerry has tasked Tony Blair, the Quartet's special envoy to the Middle East, with drawing up a plan to revitalize the PA-assigned areas of Judea and Samaria through boosting industries such as tourism, construction, information technology and agriculture.

The plan was met with a cool response by the PA, whose leaders insist it include a political dimension as well.