RAMALLAH, West Bank — After three years of planning, the Palestinian Agricultural Credit Institution (PACI) will begin accepting loan applications to support farmers by the end of the year, its director says, now that the government has approved funding and completed all the necessary logistical and legal arrangements. Some farmers, however, remain skeptical.

Palestinian farmers have been calling for such an organization for sometime to get around private lending institutions exploiting their need for money to impose high interest rates. The farmers are nonetheless concerned that there could be further delays in the PACI getting up and running, as has been the case with the Palestinian Agricultural Disaster Risk Reduction and Insurance Fund, which was approved in 2013 but is yet to start operations. The latter, whose mandate is to compensate farmers for losses resulting from natural disasters and the Israeli occupation, has not finalized procedures related to the funding of programs it hopes to implement and has no funding for its own operations.

The purpose of the PACI, the first government institution of its kind in Palestine, is to grant farmers soft loans, that is, loans with manageable collateral and repayment terms. Both conventional loans incurring interest and Islamic murabaha loans should be available. The PACI will also offer non-interest-bearing loans in special cases, such as for losses caused from natural disasters.

PACI Director Abdallah Lahlouh told Al-Monitor that on Sept. 24 the government approved a funding system that guarantees the institution’s independence. The PACI will be included in the state budget, with PACI officials managing the funds provided by the government and monies it receives from other institutions.