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Palestinian Authority faces most serious financial crisis in its history

Palestinians, in Gaza City, wait in a queue to withdraw money from cash points after the decision of cutting the salaries by 30% was taken by the government officials on 10 May, 2017 [Mustafa Hassona/Anadolu Agency]
Palestinians wait in a queue to withdraw money from cash points on 10 May 2017 [Mustafa Hassona/Anadolu Agency]

The financial crisis currently facing the Palestinian Authority (PA) is the most serious in its history, according to a report published by Xinhua citing a number of officials and experts.

The crisis is severe enough to threaten the very existence of the PA, in light of the tax revenues withheld by Israel, and a fall in funding from donor countries.

Other exacerbating factors include “the unprecedented contraction of the Palestinian economy”, as well as “the suspension of projects funded by the United States”, Xinhua reported.

According to the site, “Palestinian businessmen inside and outside the Palestinian territories have announced an initiative to grant the Palestinian government a concessional loan of 150 million dollars over the next three months”.

Palestinian businessman Munib al-Masri told Xinhua that the initiative, involving 70 Palestinian businessmen, “aimed to emphasize that the private sector is supporting the position of the Palestinian leadership, in order to meet its financial obligations”.

READ: Palestinian businessmen to lend PA $150m for 3% interest

The loan will be implemented by the end of August, at a rate of three percent.

PA spokesperson Ibrahim Melhem told Xinhua “that the initiative will enable the government to pay its financial obligations, especially the payment of the salaries of public officials”.

According to West Bank-based economic analyst Haitham Daraghmeh, local revenue – accounting for 30 percent of the Palestinian budget – has “also fallen as a result of the lack of payment of government salaries”, which in turn led “to a weak purchasing power in the Palestinian markets”.

In recent statements to Palestinian news agency WAFA, head of Palestinian monetary authority Azzam Shawwa “called on the international community and the Arab countries to honour their commitments to the PA to overcome the financial crisis, pointing out that it is worsening day by day.

Meanwhile, Hussein Al-Shaikh, member of the Fatah Central Committee, said that the financial siege has intensified in the context of the PA’s rejection of the Trump administration’s policies.

OPINION: Is the PA really suffering from a financial crisis?

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