Recurrent balance and financing
Budgetary operations on a cash basis during the first quarter of 2008 (Q1) resulted in recurrent deficit, before external budget support, of $ 317 million (table 1). While this deficit is expected to increase in the second quarter and stabilize thereafter, it is well within the PNA annual budget deficit projection of $ 1.36 billion, when annualized ($ 1.27 billion). During the first quarter of 2007, the deficit was $ 118 million. However, over the last year (March 2007- March 2008), the US dollar depreciated by 13% with respect to the NIS, which is used for the virtual totality of PNA expenditures and revenues. This makes comparisons of budgetary operations in NIS of Q1, 2007 with Q1 in 2008, more meaningful than in US dollars.

The first quarter recurrent deficit was financed by a large inflow of external budget support, amounting to $ 526 million, as opposed to $ 219 million in Q1 of 2007. The largest donor was the European Union, $ 180 million, (table 7), followed by Arab Countries ($ 153 million, mostly from the UAE and Saudi Arabia) and the United States ( $ 152 million ) After taking into account external budget support, a recurrent surplus emerged in 2008 of $ 209 million. In 2007 the recurrent surplus during the first quarter of the year was $ 101 million. Development expenditures are fully financed from abroad, and therefore the recurrent and overall balances including external financing are the same.

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