The European Union has announced a new three-year financial support package for the Palestinians worth up to 1.6 billion euros ($1.8bn), AFP reports.

The fresh aid pledge came just ahead of a meeting between Palestinian prime minister Mohammed Mustafa and EU foreign ministers in Luxembourg.

“We are stepping up our support to the Palestinian people. EUR1.6bn until 2027 will help stabilise the West Bank and Gaza,” EU foreign policy chief Kaja Kallas wrote on X.

“This will reinforce the PA’s (Palestinian Authority) ability to meet the needs of the Palestinian people in the West Bank and prepare it to return to govern Gaza once conditions allow,” Kallas said.

Brussels — the biggest international donor to the Palestinians — said the package would include 620 million euros in grants for the PA.

The funds will be linked to reforms on “fiscal sustainability, democratic governance, private sector development and public infrastructure and services”, the EU said.

The rest will be made up of 576m euros in grants for projects aimed at helping economic recovery in Gaza, the West Bank and East Jerusalem.

A further 400m euros in loans would come from the bloc’s lending arm, the European Investment Bank.

The EU’s new package follows on from the previous three-year support plan worth 1.36bn euros from 2021 to 2024.