The Palestinian economy has been stalling since the beginning of 2019, months after the tax revenue crisis with Israel, according to a report released by the Statistics Authority on Tuesday.
The Palestinian Central Bureau of Statistics and the Palestinian Monetary Authority in a joint report said that the current account of the Palestinian balance of payments for the first quarter of this year witnessed a deficit of 306 million US dollars.
The current account deficit (goods, services, income, current transfers) attributed the deficit to the trade balance of US $ 1,208 million and the US $ 255 million service balance.
The income account (employee compensation and investment income) recorded a surplus of US $ 640 million in the first quarter of 2019, up 4 percent from the previous quarter.
The investment income received from overseas adjusted to US $ 47 million, mainly due to income received on portfolio investments abroad, as well as interest earned on Palestinian deposits in foreign banks.
Net current transfers recorded a surplus of US $ 517 million, up 2 per cent from the previous quarter, while total current transfers from abroad adjusted to US $ 598 million.
Current transfers to the public sector accounted for 32 per cent, down 7 per cent from the previous quarter, while current transfers to other sectors accounted for 68 per cent, while donor remittances accounted for about 32 per cent of total remittances from abroad.
The preliminary balance of payments results indicated a surplus in the capital and financial account of US $ 167 million as a result of the surplus of US $ 192 million in the financial account.
On the other hand, the reserve assets of the Monetary Authority increased by US $ 45 million during the quarter, compared with an increase of US $ 53 million in the previous quarter.
The Palestinian Authority faces a severe financial crisis since Israel´s decision to deduct funds from Palestinian tax funds, on the pretext of the Authority´s financial benefits to the families of martyrs and prisoners.
According to the Ministry of Finance, the Israeli deduction procedure targets $ 12 million a month, or $ 144 million a year, from Palestinian tax revenues.
Israel originally deducts 3 percent of the total tax it transfers to power, estimated at more than $ 1 billion a year. It also deducts Palestinian debts in exchange for the supply of oil, electricity and other services.
The Authority refused to receive any sums of tax revenues from Israel, and has so far maintained its position that funds must be transferred in full without any deduction.
