EU pledges $1.8 bn aid package to Palestinian Authority to rebuild Gaza

Over a third of the two-year aid will directly support the Palestinian Authority to boost finances, governance, and private sector growth

The European Union on Monday unveiled a financial aid package of up to 1.6 billion euros ($1.8 billion) to support the beleaguered Palestinian Authority and fund projects in the West Bank, Jerusalem and war-ravaged Gaza.

The offer came as Israel expanded its offensive across Gaza over the weekend.

More than a third of the money, to be provided over two years, will come as direct budget support to the Palestinian Authority and it's aimed at improving financial sustainability, democratic governance and services to help the private sector develop.

Our programme aims to support the Palestinian people in building a sustainable future," said EU Mediterranean Commissioner Dubravka uica. It's about the governing capacity. It's about advancing economic recovery. It's about strengthening the resilience of the private sector.

Speaking to reporters after talks in Luxembourg with Palestinian Prime Minister Mohammad Mustafa, she said "a well-functioning and reformed Palestinian Authority must play a central role in the post-conflict governance of Gaza. This is our position.

Over 576 million euros ($653 million) in grants will go to fund projects in several sectors across the Palestinian territories, with 82 million euros ($93 million) going to the UN Palestinian refugee agency.

The private sector can benefit from up to 400 million euros ($456 million) in low-cost loans from the EU, the world's largest aid donor to the Palestinians.