RAMALLAH, Palestinian Territories, Sept 26, 2025 (BSS/AFP) - The Palestinian Authority welcomed on Friday foreign fund pledges it said would help it keep government services going while Israel withholds tax revenues it collects on its behalf.

Donor countries including Saudi Arabia, Germany and Spain pledged at least $170 million to finance the budget of the Ramallah-based PA in New York on Thursday, according to Palestinian Prime Minister Mohammad Mustafa's office.

The announcement came as world leaders gathered for the UN General Assembly, with a recent string of recognitions of the State of Palestine by countries including France and Britain.

Palestinian president Mahmud Abbas, who on Thursday addressed the General Assembly by video, rejected any future role for Hamas in Palestinian governance.

Since Hamas seized total control of Gaza in 2007, the PA has had no leadership role there.

The PA had sought $400 million a month for six months, and the prime minister's spokesman Mohammad Abu al-Rob told AFP it was unclear whether the pledged funds would be renewed.

The PA has long been in fiscal crisis, but its finances were further hit by the war in Gaza, with Israel withholding tax revenue meant for the PA.

In the West Bank, services provided by the PA have deteriorated in recent months, with Israel stopping tax revenue transfers amounting to 68 percent of the authority's budget, according to Abu al-Rob.

"Who can continue working while losing 60 percent? Which country can continue offering services?" he said.

Because of the cuts, schools in the West Bank opened late this year, and were still only opening three days a week, he added.

The cuts have also "reduced work to the lowest limit for emergency cases and operations", while also hitting medicine stocks, he said.

- 'Economic strangulation' -

Palestinians living in poverty were also affected, Abu al-Rob said, with their numbers rising by over 150 percent since the start of the Gaza war, and with cash assistance not paid out in over two months.

An increase in the number of Israeli checkpoints in the West Bank, and a reduction in work permits for West Bank Palestinians seeking work inside Israel have had a drastic impact.

The Palestinian economy is largely governed by the 1994 Paris Protocol, which granted sole control over the territories' borders to Israel, and with it the right to collect import duties and value-added tax for the PA.

Israel says that some of the money it withholds is meant to pay back costs such as electricity it sells to Palestinians.

But Finance Minister Bezalel Smotrich, who stopped all payments to the PA four months ago, has said he would pursue the collapse of the Palestinian government through "economic strangulation" to prevent the creation of a Palestinian state.