Report: A severe financial crisis facing the government in the absence of foreign aid

 The Palestinian government is facing a severe financial crisis in the absence of foreign aid and the escalation of the tax crisis with Israel, according to what Palestinian officials have warned.

The government has not set any date for disbursing the salaries of its employees in the public sector until today, knowing that they are usually paid before the fourth day of every month.

Palestinian officials said today, Sunday, that the government is suffering from a stifling financial crisis and has faced great difficulties in securing salaries for the month of June.

Officials attributed the difficulties to three main reasons, namely the decrease in local taxes as a result of the Corona pandemic crisis, the decrease in foreign aid and the increase in loans from local banks.

The Palestinian Authority expects a deficit of one billion dollars at the end of this year, based on official data.
Recently, the Palestinian government estimated its total expenditures for the year 2021 at about $5.6 billion, compared to revenues of about $4.6 billion.

Although the authority expected foreign aid to reach $210 million in the first half of this year, it actually received only $30 million, according to what it recently announced.

The official newspaper, Al-Hayat Al-Jadida, stated that the Palestinian tax revenues were subjected to further piracy from Israel, which deducted about $35 million last month under the pretext of paying allowances for prisoners and families of martyrs.

Israel has started deductions from the taxes it collects on behalf of the Palestinian Authority since 2019, according to a law approved by the Israeli Knesset during the administration of former US President Donald Trump.

The newspaper pointed to the almost complete halt in international aid provided to the Palestinian government, in the absence of international aid and grants in an unprecedented manner for nearly two decades.

And the Monetary Authority´s report on government financial developments stated, "The Authority did not receive almost any grants or foreign aid during the first quarter of this year.

According to the same report, the tax funds covered during the first quarter 56% of the due expenses, and 116% of the due salaries and wages bill.

It seemed remarkable that the usual aid to the Palestinian Authority has been suspended from Arab countries, and the support it provides has been a constant tradition in its foreign policy.

The Palestinian Authority has recently suffered from a deterioration in its foreign relations, especially with the European Union, its largest funder, in light of its strong criticism of the failure to hold general Palestinian elections since 2006.

Prime Minister Muhammad Shtayyeh is scheduled to meet in Ramallah today, with members of the Revolutionary Council of the Fatah movement, to discuss the government´s crises.

A member of Fatah´s Revolutionary Council, Iyad Safi, told the official Palestinian radio that the meeting will discuss the challenges that the Palestinian cause is going through, and the risks facing the government, in light of the crises that have befallen it.

Safi stressed the dangers facing the Palestinian cause in light of the attempts of pressure and blackmail practiced by Israel against the Palestinian leadership.