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PA says facing budgetary problems after fall in foreign funding
The Palestinian Authority (PA) is likely to impose austerity measures after a reduction in overseas funding, the PA Prime Minister warned yesterday.
Rami Hamdallah told Al-Quds newspaper that “we had expected to get $1.2bn (£978m) in [external] support and aid but we have only received $640m (£521m) so far”. In a statement, the PA cabinet said that it expects to run a budget deficit in 2017 of £863m, equivalent to 15 per cent of gross domestic product. The statement further said that it expects the shortfall in foreign funding to amount to £623m in 2017 and that “such a decline compels us to adopt a austerity in all fields”.
Reuters claim that Saudi Arabia, Turkey, and United Arab Emirates in particular, have cut back their contributions to the PA in recent months.Saudi Arabia contributed around £16m each month to the PA until last April, but has reportedly stopped payments in part to pressure PA President Mahmoud Abbas to implement political reforms.
Reuters also reports that the European Union and US have recently reduced their direct budgetary support to the PA, opting instead to fund specific development projects. In December 2016 the UK government announced that it will continue to provide taxpayer-funded aid to the PA, with a series of “critical changes” to how the system was previously run. British aid will focus “solely on vital health and education services,” with funding going towards “the salaries of health and education public servants on a vetted list” only.
In September, Israeli government Minister Tzachi Hanegbi attended a conference of international donors to the PA in New York. He reportedly asked the donor countries to help bolster the Palestinian economy, with Israel keen to maintain stability in the PA-controlled West Bank.
Hanegbi reportedly outlined to the international representatives a number of development projects that Israel is supporting in order to improve Palestinian living standards. Hanegbi specifically highlighted a decision to link the PA to Israel’s natural gas pipeline, the supply of six million cubic metres of water to the PA, new banking cooperation and the allocation of phone networks.