The Palestinian Authority will receive a transfer of 1.5 billion shekels ($430 million) from Israel, officials from the two governments said Friday, in a step towards resolving a months-long standoff between them.
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, Palestinian civil affair minister Hussein al-Sheikh said.
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, prompting Palestinian president Mahmud Abbas to refuse all payments -- saying he would accept all or nothing.
The money comes from customs duties levied on goods destined for Palestinian markets that transit through Israeli ports and constitutes more than 50 percent of the PA's revenues.
The deduction corresponds to what Israel says the PA paid Palestinian prisoners in Israeli jails, or their families.
Prisoners who have carried out attacks on Israelis are among those receiving the payments, and Israel says the policy encourages further violence.
Palestinians view prisoners as fighting against Israel's occupation and say the money supports families that have lost their main breadwinners.
Sheikh said 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 financial shortfall had been so severe the PA has been forced to halve salaries to its tens of thousands of civil servants.