RAMALLAH, Tuesday, May 7, 2024 (WAFA) – According to the Ministry of Finance, the Palestinian National Authority is facing a grave financial situation due to the Israeli occupation government's persistent and illegal withholding of Palestinian funds, as well as the absence of any Arab or international financial support reaching the government's budget until the end of last April.
In order to resolve this suffocating financial crisis, the Palestinian government is undertaking a number of efforts with international bodies to pressure Israel to release withheld Palestinian funds and cease the new Israeli deductions from Gaza's share of the budget, in addition to other Israeli illegal deductions, and overcoming this situation is contingent upon the success and effectiveness of such endeavors.
Details of Israeli financial deductions from the Palestinian clearance revenues
According to the Ministry of Finance, up until the present date, Israel continues to withhold around NIS 6 billion (nearly $1,6 billion), in addition to new deductions Israel cuts from the budget allocated for the Gaza Strip.
Despite Israel's withholding of Palestinian funds, the Palestinian Authority remains committed to disbursing these allocations to their rightful beneficiaries. However, Israel persists in deducting equivalent sums from the clearance revenues, thereby doubling the financial burden on the state budget.
Furthermore, Israel annually deducts over NIS 1 billion (nearly $270 million) from clearance revenues under the pretext of deducting electricity and water consumption, especially in the Gaza Strip.
On the other hand, the value of clearance revenues has decreased by 60% over the past months due to Israel's increased deductions from Palestinian funds, along with the overall economic downturn, leading to a significant decline in revenues.
As for Arab and international support, MoF data indicate that no Arab or international financial support have been received for the government’s budget thus far, with expectations of some support arriving soon. Additionally, government revenues have declined due to the economic situation and the Israeli deductions from tax revenues Israel collects on behalf of the Palestinian Authority, which further exacerbates the financial burden the PA has it endure.
To mitigate the gravity of the dire financial situation, the government, acting upon the directives of President Mahmoud Abbas, approved a set of austerity measures during its previous session in order to reduce government spending. These measures entail halting the purchasing of new vehicles, implementing measures to park government vehicles at ministries and institutions outside of working hours, and suspending general procurement requests except for urgent necessities, among other measures aimed at reducing government spending. Additionally, the government has devised plans to ensure financial stability until the end of this year.
International pressure on Israel to release withheld funds
The Palestinian government has engaged in a series of meetings and contacts with representatives of various countries and international organizations to pressure Israel to release funds it currently withholds. According to official government statements, these engagements have primarily focused on urging for the release of NIS 1.765 billion (nearly $471 million), currently held in Norway. This sum corresponds to Gaza's allocated share of the general budget, which Israel has illegally withheld from clearance revenues since last October. Additionally, there are outstanding crossing fees collected by Israel over the years, totaling approximately NIS 900 million (nearly $240 million), which have not been transferred to the Ministry of Finance. In addition, there are other unspecified funds due to Israel's refusal to disclose certain details regarding withheld Palestinian funds.
According to the Ministry of Finance, the new Palestinian government has assumed its responsibilities with a public debt exceeding $11 billion. This includes debts owed to the Palestinian Pension Agency, debts of external banking institutions, as well as arrears owed to public sector employees, suppliers, service providers, and debts of local banks.
K.T
