Emad Drimly
April 20, 2011 - 12:00am

The Palestinian National Authority (PNA) faces a double fiscal crisis due to a lack of international funds, which affected its budget, as well as the ability of the staff unions to improve its employees' wages and pay their financial receivables, officials said on Tuesday.

Ahmed Majdalani, the PNA labor minister told Xinhua that over the past few years, the PNA has been suffering from a real fiscal crisis due to the lack of international funds offered to the PNA by donor countries, adding that "this had left a large gap in the budget."

Three weeks ago, the PNA cabinet had approved a draft of its general budget bill for 2011, with a value of 3.7 billion U.S. dollars, and a 967 million dollars deficiency, waiting to be covered by foreign aids and donors.

"The Palestinian (National) Authority has been facing problems that accumulated over the past few years after the donor countries didn't fulfill their pledges, mainly the Arab states," said Majdalani, adding "consequently, the Authority decided to reduce dependence on the foreign aids."

He added that this fiscal crisis had negatively influenced PNA' s financial performance, mainly fulfilling its commitments towards its employees and financing developing programs. "The major reason for the crisis I could say is the drop in the donors' commitments, " he noted.

Meanwhile, Palestinian officials had earlier announced that the Palestinian cabinet has prepared a plan of reducing the dependence on the donors and the foreign aids. The reduction had reached 30 percent, while the reliance on local revenues had reached 60 percent in 2011.

The PNA cabinet said this year's budget is different from previous budgets, after it was decided to reduce reliance on foreign aids and international donations, and at the same time, keep the average economical growth standard, which grew to nine percent last year.

The PNA plan had also aimed at reducing the budget deficit total of 21 percent of GDP in 2010 to 17 percent this year. According to the budget, the PNA cabinet is expected to increase the revenues during this year to reach 2.25 billion dollars, with an increase of up to 11 percent compared with 2010.

The increase in the revenues would cover 66 percent of the current expenditure, which it rates fluctuated between 26 and 27 percent of the GDP total. In relation to the 2011 GDP, the budget refers to a rise in the wage bill to reach 1.71 billion dollars, an increase of six percent compared with last year.

Since it was established in 1994, the PNA has been depending on the money of the international donors in covering the fiscal deficiency in its annual budget.

Over the past several years, the PNA has been complaining of a severe fiscal crisis, as it pays the monthly wages for 148,000 servants, 76,000 of them are from the Gaza Strip, who remained jobless but getting their salaries paid since the Islamic Hamas movement seized control of Gaza by force in 2007.

Samir Abdallah, a prominent Palestinian economist told Xinhua that the PNA will keep confronting the same fiscal crisis amid instability of the political situation as well as a lack of commitment of the Arab and international donor countries in fulfilling their financial ledges to the Palestinians.

"The relative success of the current Palestinian government to reduce the reliance on the foreign aids is related to the weakness of the local revenues due to the instable political situation and the increase of the GDP," said Abdallah, adding "the crisis will be resolved only if the donors fulfill their pledges."

Meanwhile, Bssam Zakarneh, chief of the staff union of PNA employees announced on Tuesday that his union decided to escalate demanding the increase of the monthly wages and paying the financial receivables to increase the pressure on the PNA until their demands are met.

He said that his union will hold "an important meeting" this week with representatives of the Palestinian government in Ramallah to debate the union's demands. The staff unions had called on its employees last week to go for partial strikes, but the activities were suspended waiting for the results of the meeting.

The Palestinian Staff Unions are demanding the PNA government to include the dues of cost of living and the work accidents compensation as part of the employee salary. The medical staff union is threatening to go for a general strike if their demands are not met by the PNA.


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