BRUSSELS /PNN /
The European Investment Bank (EIB) and the European Commission have begun implementing a €400 million financing facility for Palestine, first announced in October 2025, through the signing of sub-loan agreements with several Palestinian banks aimed at supporting micro, small and medium-sized enterprises (MSMEs) facing severe economic pressures.
Under the agreements, facilitated through the Palestine Monetary Authority (PMA), financing will be distributed through local financial institutions, including Bank of Palestine ($150 million), Al-Quds Bank ($100 million), Palestine Investment Bank ($70 million), The National Bank ($50 million), and Cairo Amman Bank ($25 million).
According to a statement issued by the European Union, the agreements will provide up to $395 million in financing for Palestinian MSMEs through local financial intermediaries. The package also includes the remaining €2.1 million in technical assistance funding from a broader €3.5 million envelope, of which €1.4 million has already been allocated. The technical assistance component is designed to strengthen the wider Palestinian MSME ecosystem through direct support to businesses, financial institutions and sector-specific initiatives.
The EIB and the European Commission said the facility, implemented in cooperation with the Palestine Monetary Authority and participating banks, is expected to improve access to affordable financing for Palestinian businesses struggling amid the ongoing economic challenges linked to the conflict. The initiative aims to provide urgently needed liquidity, sustain business activity, preserve jobs and strengthen economic resilience.
The €400 million facility forms part of the European Commission’s Comprehensive Multiannual Programme for Palestinian Recovery and Resilience, a broader €1.6 billion package covering the period from 2025 to 2027. The programme includes €620 million in grants earmarked for support to the Palestinian Authority and approximately €576 million for projects aimed at strengthening resilience and recovery in the West Bank, East Jerusalem and, when conditions permit, the Gaza Strip.
“The Palestinian private sector needs reliable sources of financing to continue operating, investing and preserving livelihoods under extremely challenging circumstances,” said Gelsomina Vigliotti, Vice-President of the European Investment Bank.
“With these agreements, we are launching the implementation of the €400 million facility announced in October 2025 by providing up to $395 million through partner local banks to support Palestinian micro, small and medium-sized enterprises in sectors with urgent financing needs,” she said. “At the same time, €3.5 million in technical assistance will help strengthen the sector at multiple levels.”
Mohammad Manasra, Deputy Governor of the Palestine Monetary Authority, described the financing package as a significant step toward enhancing the ability of the Palestinian financial sector to support businesses during an exceptionally difficult period.
“The implementation of the $395 million facility represents a tangible contribution to strengthening the capacity of Palestinian financial institutions to support businesses under unprecedented economic pressures,” Manasra said.
He noted that part of the financing is being structured as subordinated debt to strengthen the capital base of participating banks while ensuring that proceeds remain dedicated exclusively to financing MSMEs.
“This cooperation will expand access to finance for businesses across Palestine, enabling them to continue operating, adapt to difficult conditions and sustain economic activity,” he added. “The Palestine Monetary Authority highly values its partnership with the European Investment Bank and local financial institutions in directing this support where it can make a real difference for businesses, families and communities.”
For his part, Michael Karnitschnig, Acting Director-General for the Middle East, North Africa and Gulf Directorate, said the EU-backed facility was now moving from commitment to implementation.
“The European Union’s €400 million facility for Palestine is now beginning to deliver on its objectives,” Karnitschnig said. “By channeling $395 million through local banks to Palestinian businesses and providing €2.1 million in technical assistance, we are delivering vital financial resources directly to companies. This is not only an investment in businesses; it is an investment in jobs, resilience and a better future for Palestinians.”
Since 1995, the European Investment Bank has provided approximately €1 billion in financing to Palestine, in addition to €120 million in risk-sharing instruments aimed at supporting Palestinian small and medium-sized enterprises.
The EIB has maintained long-standing cooperation with Palestinian financial institutions and public-sector partners to improve access to finance, support critical infrastructure projects and strengthen economic resilience across the Palestinian territories.