Money Nati Shochat/Flash90

The Palestinian Authority (PA) will receive a transfer of 1.5 billion shekels ($430 million) from Israel, officials from the two governments said Friday.

Israel will continue to deduct money from the transfers to account for the PA's payments to prisoners, a decision that sparked the row, but the two sides have agreed to further talks to resolve that issue, the PA’s “civil affairs minister” Hussein al-Sheikh said, according to AFP.

Shai Babad, director general of Israel's finance ministry, told AFP the transfer would be made on Sunday to the PA government, which is facing a crippling financial crisis caused by the dispute.

Sheikh confirmed they would receive the funds.

In February, Israel decided to withhold about $10 million a month from revenues of some $190 million it collects on the PA's behalf.

Immediately after Israel’s decision to offset the money paid to terrorists from the PA tax funds, the PA announced it would not take the partial sum of the funds from Israel.

PA chairman Mahmoud Abbas later reiterated that he would not accept partial payment of tax transfers owed by Israel and also stressed that he would not end the financial support for the families of terrorists imprisoned or killed by Israel.

The PA chairman has in the past called the PA's continued payments to terrorists a "red line" that would not be halted under any circumstances.

Sheikh said Friday the two sides had agreed to form a committee to resolve remaining issues, including the money withheld over prisoner payments.

"This is a step towards resolving the crisis but the crisis didn't end," he told AFP.

The PA spends six percent of its annual budget to pay $4.5 million a month to jailed terrorists and another $6.5 million to their families, yet continues to ask for foreign donations.

(Arutz Sheva’s North American desk is keeping you updated until the start of Shabbat in New York. The time posted automatically on all Arutz Sheva articles, however, is Israeli time.)