SAO PAULO: Israel has agreed to resume tax revenue transfers to the Palestinian Authority to fund basic services and bolster the West Bank economy, US Treasury Secretary Janet Yellen said on Tuesday, adding that the money has begun to flow.

Yellen revealed the shift at a news conference in Brazil, saying that the revenue transfers “must continue,” but warning that Israeli restrictions on the movement of Palestinian workers was stalling commerce in both the West Bank and Israel.

Speaking ahead of a G20 finance leaders meeting, Yellen said she raised the issue in a letter to Israeli Prime Minister Benjamin Netanyahu in the past two days.

“Blocking West Bank residents from working in Israel, it has a very significant negative effect on incomes in the West Bank. And Israel is also dependent on that labor force,” Yellen said, adding that labor shortages were also hurting Israel’s economy.

Palestinian leaders say their ability to govern has been effectively blocked by Israeli restrictions, including withholding of tax revenues due under the Oslo accords signed 30 years ago.

For months, the Authority has been unable to pay full public sector salaries because of a row over the refusal by the Israeli finance ministry to release part of the funds.

US President Joe Biden and his administration have backed Israel’s attacks on Gaza as necessary to root out Hamas after the group’s Oct. 7 assault on Israel in which 1,200 were killed and more than 200 taken hostage. US officials have taken a more critical stance on Israel’s onslaught in recent weeks as the death toll in Gaza nears 30,000.

Washington recently imposed sanctions on four Israeli men accused of being involved in settler violence and on Friday for the first time called Israel’s expansion of settlements inconsistent with international law.