Palestine's debt jumps 26% in April to $3.7bn

The public debt amassed by the Palestinian Authority (PA) has jumped by 26 per cent to $3.7 billion due to a combination of factors including the economic slowdown and Israel’s brutal military occupation.

The extent of the debt crises was revealed today after the Ministry of Finance issued the PA’s budget. It showed that internal and external public debt reached $3.7 billion by the end of April. The public debt in the corresponding period of 2020, was $2.9 billion.

The rise in the public debt is said to be due to the decline in the Palestinian government’s income from taxes during the past year; economic slowdown due to the spread of the coronavirus pandemic and the PA’s refusal to be blackmailed by Israel with Palestinian tax money collected by the occupation state; one of the many remnants of the Oslo agreement that is crippling Palestinians.

Despite the financial crisis, the Palestinian government refused in June last year to receive tax revenues from Israel. This continued until November of the same year. The PA said that it would continue with a total halt to ties with Israel and would not allow itself to be blackmailed.

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Israel collects an average of $200 million a month for goods imported to Palestine. Under the agreement the money is meant to be transferred to the PA’s treasury after deducting a three per cent commission. But the occupation state often exploits this arrangement.

The total domestic public debt until the end of April totalled $2.3 billion, while the external public debt increased to $1.3 billion. Public debt constitutes 28 per cent of the PA’s gross domestic product, which is approximately $13.2 billion.

To make matters worse for the PA, the rise in public debt comes as grants and foreign aid continue to decline. Only $370 million was received in loans and grants for the 2020 budget, a sharp fall from the average $1 billion it received previously on an annual basis.